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2017 (4) TMI 936 - CESTAT HYDERABAD

2017 (4) TMI 936 - CESTAT HYDERABAD - TMI - Liability of interest - short payment of tax - the actual cost of cement and steel is much higher during the said period compared to the price fixed by APSEB and the respondents - assessee claims that there was no demand for interest either in the show cause notice or in the duty confirmation orders and therefore they are not liable to pay interest - Held that: - there was no demand of interest in the show cause notice and there was no confirmation of .....

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the demand is reduced or increased in further stage of appeal. It does not speak of a situation of remand, or a situation where the duty determined is maintained by the appellate forum. - Since the appellate authority vide order dated 05.01.2001 has not modified, but maintained the order passed by the adjudicating authority, the liability to pay duty starts from the date of determination of duty which the date of the adjudication order i.e. 04.12.1996. The respondent having not paid the duty .....

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Even though in denovo adjudication the very same amount was determined, it will not set the clock back regarding date of determination of duty. Remand by the Tribunal would mean that the order under challenge has lost it s significance - respondent is not liable to pay any interest in respect of demand of ₹ 6,20,103/-. - Appeal allowed - decided partly in favor of Revenue. - Appeal No. E/765/2009 - A/30462/2017 - Dated:- 10-3-2017 - Ms. Sulekha Beevi, C.S., Member (Judicial) Sh. P.S. R .....

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s were paying Central Excise duty by taking into account the pre-determined price of steel and cement, as fixed by APSEB. In the year 1995, show cause notices were issued alleging that the appellant has short paid central excise duty for the reason that the actual cost of cement and steel is much higher during the said period compared to the price fixed by APSEB and the respondents. 3. After adjudication an amount of ₹ 6,20,103/- was confirmed as differential duty for the period 6/1990 to .....

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d before the Commissioner (Appeals) and vide Order-in-Appeal dated 05.01.2001 the Commissioner (Appeals) upheld the demand and penalty. Against the order confirming demand of ₹ 6,20,103/- an appeal was preferred before the Tribunal and the Tribunal vide order dated 01.08.2003 remanded the matter for denovo adjudication. Thereafter, vide Order-in-Original dated 31.12.2003 denovo order was passed confirming the duty again to be ₹ 6,20,103/- along with same penalty. 5. The department th .....

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ndents on 13.06.2006. 6. Thereafter, the respondents were issued a further letter dated 02.08.2006 from the department asking them to pay an amount of ₹ 14,33,645/- towards interest on ₹ 10,32,153/- (duty demand). The department had calculated the said interest from the date immediately after 3 months from the date of the initial Order-in-Originals dated 04.12.1996 (regarding duty of ₹ 4,12,050/-) and 30.04.1997 (regarding duty of ₹ 6,20,103/-). To this letter, the respon .....

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pay ₹ 2 lakhs towards interest for the period subsequent to 26.05.1995 in full and final settlement. 7. The department then issued a notice of demand in Appendix-II for recovery of an amount of ₹ 14,33,645/- and required the respondents to pay the amount within 7 days. The respondents filed writ petition No. 14112/2007 challenging the said notice. The Hon ble High Court by an order dated 05.07.2007 stayed the recovery on condition that respondents deposit 25% of the interest demand .....

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#8377; 14,33,645/-. At this juncture, it would be worthwhile to mention the grounds taken by the respondent challenging the liability of interest before the Assistant Commissioner which is reproduced as under: 1. The interest provisions under Section-11AA of CE Act, 1944 are in force only with effect from 26-05-1995, hence interest is not payable. 2. The demand of interest was not mentioned in the Show Cause Notices or Adjudication orders. 3. The worksheet in respect of quantification of interes .....

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e assessee doesn t pay the duty demanded within three months from the date of such determination of duty. So, the relevant date is the date of determination of duty but not the date / period during which the goods in question are involved. In the present case, the date of determination of duty is 04-10-1996 & 30-04-1997, which are after the introduction of interest clause in the Act. Hence, there is liability of the interest for the above duty amount. Further, the Superintendent has also inf .....

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if duty is not paid as ordered in the adjudicating orders. The worksheet was also enclosed along with this letter of clarification. 10. Meanwhile, the Hon ble High Court vide order dated 23.11.2007 disposed of the writ petition granting liberty to the respondent to file appeal against the above order dated 16.11.2007 and also directing both sides to maintain status-quo till the disposal of the appeal. 11. The respondent thereafter filed appeal before the Commissioner (Appeals) who set aside the .....

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d in 2001. As per this sub-section, the provisions of sub-section (1) shall not apply to cases where the duty becomes payable on and after the date on which the Finance Bill, 2001 receives the assent of the President. (i) The Commissioner (Appeals) has considered the date of passing the denovo order (dated 31.12.2003) as the date for determination of duty to hold that sub-section (2) of Section 11AA would be applicable and that interest is not chargeable on duty demand of ₹ 6,20,103/-. (ii .....

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levant date for computing the date of determination of duty. (iii) In any case, since the order confirming ₹ 4,12,050/- dated 04.12.1996 having not been remanded, the said date has to be considered date of determination of duty for calculating the liability of interest under Section 11AA of the Central Excise Act, 1944. (iv) It is also argued by the Ld. AR that the Commissioner (Appeals) has erred in holding that the order dated 04.12.1996 passed by the adjudicating authority confirming du .....

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ugned order the Commissioner (Appeals) observed that the date of determination of duty in both orders is after 2001 and therefore as per sub-section (2) of Section 11AA there is no liability to pay interest. He has considered the date of passing the denovo adjudication order ( in regard to ₹ 6,20,103/-) and the date of appellate order (in regard to ₹ 4,12,050/-) which are respectively 31.12.2003 and 05.01.2001 as date of determination of duty. 15. Sub-section (2) was introduced in Se .....

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as is for the time being fixed by the Board, on such duty from the date immediately after the expiry of the said period of three months till the date of payment of such duty : Provided that where a person chargeable with duty determined under sub-section (2) of section 11A before the date on which the Finance Bill, 1995 receives the assent of the President, fails to pay such duty within three months from such date, then, such person shall be liable to pay interest under this section from the dat .....

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the case may be, the Court, the date of such determination shall be, - (a) for the amount of duty first determined to be payable, the date on which the duty is so determined; (b) for the amount of increased duty, the date of order which the increased amount of duty is first determined to be payable; (c) for the amount of further increase of duty, the date on which the duty is so further increased. The relevant provision contained in sub-section (2) of 11AA is noticed as under: The provisions of .....

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rest on all orders passed prior to 1995, if not paid within three months of the date of determination of duty. Explanation (1) and (2) explains how the date of determination of duty is to be reckoned. These explanations deal only with date of determination of duty when the demand is reduced or increased in further stage of appeal. It does not speak of a situation of remand, or a situation where the duty determined is maintained by the appellate forum. 17. The Assistant Commissioner who passed or .....

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remanded the matter and denovo adjudication was passed on 31.12.2003 the date of determination of duty would be date of denovo order in the case of duty demand of ₹ 6,20,103/-. In the case of duty demand of ₹ 4,12,050/- the date of determination of duty would be the appellate order dated which is 05.01.2001. The Commissioner (Appeals) has relied upon the judgment in the case of CCE, Pondicherry Vs Spic Pharmaceuticals Division [2006 (206) ELT 443 (Tri-Chennai)], the Commissioner (App .....

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he Commissioner (Appeals) vacated the demand of interest on the ground that it was beyond the scope of the show cause notice. According to the appellant, where duty liability was determined by the competent authority under Section 11A of the Act, the liability to pay interest on the duty amount so determined for the period specified under Section 11AA is automatic. The SDR has reiterated this plea and has claimed support from the Supreme Court s judgment in Commissioner of Trade Tax (U.P.) v. M/ .....

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ection (2) of Section 11AA reads as under :- The provisions of sub-section (1) shall not apply to cases where the duty becomes payable on and after the date on which the Finance Bill, 2001 receives the assent of the President. The Order-in-Original was passed on 1-5-2002. In other words, the assessee s liability was determined on that date. The appellant has invoked sub-section (1) of Section 11AA for demanding interest from the respondent. But the provisions of the sub-section are not applicabl .....

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ate of original adjudication i.e. 04.12.1996 is not without substance. The Commissioner (Appeals) has held that when the respondent filed appeal and appellate authority passed order dated 05.01.2001 confirming the same, the original order dated 04.12.1996 merged with the appellate order and therefore date of determination of duty has to be considered as date of appellate order which is 05.01.2001. I cannot agree with this view of the Commissioner (Appeals). Since the appellate authority vide ord .....

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of duty is the date of first Order-in-Original i.e. 30.04.1997 is not tenable. In this matter, the Tribunal had remanded the matter for denovo adjudication. Even though in denovo adjudication the very same amount was determined, it will not set the clock back regarding date of determination of duty. Remand by the Tribunal would mean that the order under challenge has lost it s significance. Similar issue has been analysed in the case of Blue Star Ltd., Vs Union of India [2010 (250) ELT 179 (Bom) .....

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a reduced amount. By Explanation 2 where duty payable is increased or further increased two situations are set out. For the amount of duty first determined to be payable it is the date on which the duty was first determined and in so far as the increase of duty is concerned, the date on which the increased amount of duty is payable. So also in the case of further increase the date of the order on which the amount is further increased. The Explanation, therefore, gives the intent of the Legislatu .....

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annot be said to be a determination. An adjudication will culminate in an order. That order would be the determination and/or ascertainment of duty. The relevant date for commencement of time the interest would be from the date the duty is determined if not paid within three months. Once there be an order, setting aside the entire order of determination there is no ascertained duty payable. In the instant case, therefore, though there was original order passed on 14th June, 1993 that was set asi .....

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h Court in the case of CCE, Chennai-II Vs Lucas TVS Ltd., [2016 (333) ELT 259 (Mad)] and by Hon ble High Court of Punjab & Haryana in the case of CCE, Ludhiana Vs National Fertilizers Ltd., [2017 (347) ELT 225 (P&H)]. The Hon ble High Court of P&H observed as under: 8. Section 11AA of the Act provides that if an assessee fails to pay duty within three months from the date of determination, he is liable to pay interest thereafter. Explanations 1 and 2 thereof will not be applicable in .....

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