Case Law Details
Steel Authority of India Limited Vs Commissioner of Central Excise (CESTAT Kolkata)
CESTAT Kolkata held that payment of interest doesn’t arise in the case of revenue neutral situation and hence no interest is payable by the appellant.
Facts- The appellant is engaged in the activity of manufacturing various steel products, namely, billets, rounds, HT Bars, blooms, etc. to its independent customers as well as clearing the same to its job workers. The said goods were cleared by the appellant to the job-workers upon payment of excise duty on value determined as per Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
The job-workers used the said goods for further manufacturing, by undertaking the processes of say-cutting, rolling, reeling, colour coding, etc. and supplied the job-worked goods back to the appellant on payment of duty.
A show-cause notice was issued to the Appellant, proposing differential duty for the period July 2000 to December 2004 on the ground that the assessable value of the goods cleared to job workers ought to be computed in terms of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 r/w Section 4(1)(b) of the Central Excise Act,1944.
The Tribunal dismissed the appeal to the extent of duty demand and interest for want of clearance from the Committee of Disputes. However, the penalty imposed was set aside. Hon’ble Apex Court directed for restoration of this appeal before this Tribunal on the limited aspect of interest on duty.
Conclusion- Held that it is a case of revenue neutrality, which means whatever duty has been paid by the appellant and the same is entitled as cenvat credit to the appellants themselves. As it is a revenue neutral situation, we hold that no interest is payable by the appellant.
Tribunal in the case of Jai Balaji Industries Limited has held that the payment of interest does not arise in the case of revenue neutral situation.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The appellant is in appeal challenging the payment of interest on Central Excise duty confirmed by way of impugned order for the demand of Central Excise duty during the period January, 2000 to December, 2004.
2. The facts of the case are that the appellant is engaged in the activity of manufacturing of various steel products, namely, billets, rounds, HT Bars, blooms, etc. to its independent customers as well as cleared the same to its job workers. The said goods were cleared by the appellant to the job-workers upon payment of excise duty on value determined as per Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
2.1 The job-workers used the said goods for further manufacturing, by undertaking the processes of say-cutting, rolling, reeling, colour coding, etc. and supplied the job-worked goods back to the appellant on payment of duty.
2.2 Based on scrutiny of the documents, a show-cause notice was issued to the Appellant, proposing differential duty for the period July 2000 to December 2004 on the ground that the assessable value of the goods cleared to job workers ought to be computed in terms of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 r/w Section 4(1)(b) of the Central Excise Act,1944.
2.3 The matter was adjudicated and the demand of duty was confirmed.
2.4 Aggrieved from the said order, the appellant filed this appeal before this Tribunal.
2.5 In the meantime, in terms of the Honb’le Supreme Court’s order in the two cases of ONGC v Collector, reported at 1992 (61) E.L.T. 3(S.C.) and 1994 (70) E.L.T. 45 (S.C.), the appellant applied for clearance from Committee of Disputes, to litigate the matter. The Committee of Disputes, after hearing both the appellant as well as the respondent, resolved the matter by directing the appellant to litigate only the penalty portion since the demand was revenue neutral.
2.6 Therefore, this Tribunal vide Order No. S-519/A-1148/Kol/07 dated 11.06.2007 dismissed the appeal to the extent of duty demand and interest for want of clearance from Committee of Disputes. However, penalty imposed was set aside.
2.7 Thereafter, this matter travelled up to the Hon’ble Apex Court, and the Hon’ble Apex Court vide its order dated 28.07.2022, directed for restoration of this appeal before this Tribunal on the limited aspect of interest on duty.
2.8 Hence this appeal.
3. The ld. Counsel appearing on behalf of the appellant submits that the demand of duty confirmed is a revenue neutral situation, as there is no demand of duty, therefore, no interest is payable by the appellant. To support his contention, he relied on the following decisions :
(1) CCE, Pune Vs. Coca-Cola India Pvt. Ltd., 2007 (213) E.L.T. 490 (S.C.);
(2) CCE & C. Vadodara-II Vs. Indeos Abs Ltd. 2010 (254) E.L.T. 628 (Guj.), affirmed by the Hon’ble Supreme Court in [2011 (267) E.L.T. A155 (S.C)
(4) M/S. Jai Balaji Industries Ltd. v. Commissioner of Central Excise, Bolpur – 2023 (6) TMI 1102 – CESTAT KOLKATA.
4. As the show-cause notice has not been issued to the appellant by invoking extended period of limitation, therefore, the demand of interest is not payable as held by this Tribunal in the cases of Hindustan Insecticides Ltd. vs. Commissioner of Central Excise, LTU., 2012 (297) ELT 332 (Del.); & Steel Authority of India Ltd. V. CCE, Bolpur passed in Final Order No. 75775/2023 dated 19.06.2023 passed by this Tribunal.
5. On the other hand, the ld. A.R. for the Revenue submits that although there is a situation of revenue neutral, but they are required to pay interest for the intervening period as held by this Tribunal in the case of Essar Steel Limited Vs. Commissioner of Central Excise, Raipur reported in 2016 (341) ELT 145 (Tri.-Del.).
6. Heard both sides and considered the submissions.
7. The short issue involved in this case is to be decided whether interest is payable on the demand of Central Excise duty, which has been held to be revenue neutral or not ?
8. The ld. A.R. for the Revenue relied on the decision of this Tribunal in the case of Essar Steel Limited (supra), wherein we find that the issue has been decided by the Tribunal is whether there is revenue neutral situation in the facts and circumstances or not, which is not the issue in hand before us. Therefore, the same decision is not relevant to the facts of this case.
9. We find that it is an admitted fact that it is a case of revenue neutrality, which means whatever duty has been paid by the appellant and the same is entitled as cenvat credit to the appellants themselves.
10. As it is a revenue neutral situation, we hold that no interest is payable by the appellant as held by this Tribunal in the case of Jai Balaji Industries Limited (supra) wherein it has been held as under :
“15. As held by the Hon’ble Gujarat High Court in the case of CCE & C, Vadodara-II v. Indeos Abs Ltd. [2010 (254) ELT 628 (Guj.)], in case the goods were cleared to their own sister concern, which is availing benefit of the Modvat Credit, hence the entire exercise is revenue neutral. Although the appellant paid differential duty later on, but same was available as Cenvat Credit to their sister unit is a revenue neutral situation, if appellant would have not paid differential duty that was not Excise Appeal Nos.552, 853, 854, 976 of 2011 AND Excise Appeal Nos.289, 290, 291, 292, 293, 542, 543 & 545 of 2012 11 payable in terms of the above cited decisions. Therefore, as duty was not payable, the payment of interest does not arise in the case of revenue neutral situation. Further the case law relied upon by the Ld.AR for the department in the case of Indoworth (India) Ltd. (supra), is not applicable to the facts of the present case as in that case the appellant sought refund of interest paid on Service Tax which was not payable by the assessee.
16. In view of the above discussion, we hold that it is the revenue neutral situation, no duty is payable by the appellant therefore whatever duty paid by the appellant Cenvat credit of the same has been availed by the sister unit, question of payment of interest does not arise. In view of the above discussion, the appeals mentioned at Sl.No.2-12 are also allowed by setting aside the impugned orders. In the result, all the appeals are allowed with consequential relief.”
11. Therefore, we hold that no interest is payable by the appellant as it is a revenue neutral situation. Accordingly, the demand of interest is set aside.
12. In view of the above, this appeal is disposed off.
Excise Appeal No.914 of 2011
13. The facts of the case are that the appellant is manufacturing of various steel items and a show-cause notice was issued to the appellant on 17.04.2008 for the period July, 2000 to December, 2004, to demand of duty on the ground that the assessable value of the goods cleared to job workers ought to be computed in terms of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 r/w Section 4(1)(b) of the Central Excise Act, 1944.
13.1 The matter was adjudicated vide Order dated 31.03.2006 and the demand of duty was confirmed to the tune of Rs.15,65,36,574/-. The said order was challenged before this Tribunal and this Tribunal vide Order dated 11.06.2007, held that the appeal filed by the appellant for recovery of demand of duty was dismissed as non-maintainable.
13.2 Thereafter, recovery proceedings were initiated against the appellant and the said amount confirmed, the duty was recovered from the appellant, but the appellant contested the matter before the Hon’ble Apex Court. During the pendency of the appeal before the Hon’ble Apex Court, the appellant filed a refund claim of the said recovered amount of Rs.15,65,36,574/- confirmed by the order dated 31.03.2006. The said refund claim was rejected.
13.3 Against the said order, the appellant is before us.
14. The ld. Counsel for the appellant submits that the entire basis of prescribing the mechanism of Committee of Dispute has been wrongly understood by the Department in the present proceedings. It is his submission that once matter goes before the Committee of Dispute, the operation of the order under challenge got suspended. Further, for the purpose of going before the Committee of Dispute is not merely for the appellant to get approval or rejection regarding its right to file appeal. The purpose is also the resolution by effective conciliation of dispute between the PSUs and the Union of India, represented by Ministries or their agencies. Such resolution wherein the Committee of Disputes does not require the matter to be litigated, does not necessarily means confirmation of demand against the assessee in tax matters. Such resolution may also be achieved by Revenue not enforcing the demand.
14.1 Therefore, by virtue of the resolution by way of conciliation suggested by COD, the demand in the instant case per se was not recoverable. However, the Department still insisted on recovery and got the same affected by partly adjusting against the rebate claim of the Appellant and partly getting the Appellant to pay through its PLA, which was paid under protest. Thus, the resolution suggested by COD was effectively not agreed by the department as the COD granted permission to litigate demand for the immediately succeeding period on the identical issue, which has been decided in favour of the appellant. Thereafter, having suffered the duty and not being able to neutralize its incidence in the present period, even by passing on the same to the job-workers, the Appellant filed refund claim on 28.03.2008 to the department for refund of such erroneously recovered excise duty.
14.2 He further submits that the said refund claims have been rejected by the impugned order on the ground that the Order-in-Original dated 31.03.2006, to the extent of confirmation of demand of excise duty, has attained finality, as the appellant did not get the permission of COD to litigate the demand of the excise duty. Thus, the appellant cannot seek the same as refund.
14.3 He submits that in terms of the resolution by way of conciliation suggested by the COD, since the demand was revenue neutral, the same ought not to have been recovered by the Revenue, which was heard and was a party to the conciliation process before the COD. It is incorrect on the part of the Revenue to contend that the adjudication order attained finality was far as the demand is confirmed inasmuch as such order has to be subject to the conciliation arrived at by the COD, which unequivocally held the demand to be revenue neutral. There is no direction in the said order regarding the confirmation of the demand or for the appellant to pay. Therefore, the recovery affected is against the terms of conciliation before the COD and cannot be said to be in conformity to the adjudication order and such adjudication order cannot be said to be final as regards the confirmation and recovery of demand. Therefore, the appellant is entitled for refund and interest on delayed refund is also entitled.
15. Heard the ld. A.R. for the Revenue, who supported the impugned order.
16. After hearing the parties, we find the order dated 31.03.2006, was challenged before this Tribunal and this Tribunal vide Order No. S – 519/A-1148/Kol/2007 dated 11.06.2007 passed the following orders :
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On going through the said order of the Tribunal, in Paragraph (3) states that –
“3. From the above clearance given by COD, it is seen that the appellants have been allowed to pursue their appeal in respect of penalty only. As such, the appeal filed by them in regard to duty demand is dismissed as non-maintainable.”
17. As such, the appeal filed by the appellant in regard to duty of demand is dismissed as not maintainable by this Tribunal vide order dated 11.06.2007 and the said part of the order of this Tribunal was never challenged by the appellant.
18. In that circumstances, the order passed by the adjudicating authority dated 31.03.2006 was confirmed by this Tribunal vide its
Order dated 11.06.2007.
19. In that circumstances, as the order of the Tribunal was never challenged by the appellant qua confirmation of demand of duty, we hold that that the refund claims are not maintainable. Accordingly, the same are rejected.
20. In view of the above observations, we do not find any infirmity in the impugned order and the same is upheld. Accordingly, the appeal filed by the appellant is dismissed.
(Pronounced in the open court on 15.09.2023)
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