CESTAT, NEW DELHI BENCH
Hindustan Zinc Ltd.
Commissioner of Central Excise, Jaipur-II
Stay order Nos. 813-814/2011-Ex (PB)
Application Nos. E/Stay/3124 & 3144/2010
APPEAL NOS. E/3345 & 3359 OF 2010
AUGUST 5, 2011
Justice R.M.S Khandeparkar, President
Heard the Advocate for the appellants at length and the DR for the respondent. This application has been filed in the appeal arising from the order dated 5-7-2010 passed by the Commissioner (Appeals). By the impugned order, the lower appellate authority has dismissed the appeal filed by the appellants against the order dated 31-3-2009 by the adjudicating authority whereby the duty demand of Rs. 6,44,219/- for the month of November, 2005 and Rs. 93,071/- for the month of December, 2005 was confirmed along with interest while giving credit to the differential duty of Rs. 82,52,824/- deposited on 9-6-2006.
2. The dispute essentially relates to the claim of the appellants for adjustment of the excess duty stated to have been paid for the period January, 2006 to March, 2006 towards short payment for the period from April 2005 and December 2005.
3. The second stay application No. 3144/2010 relates to the appeal arising from the order dated 5-7-2010 whereby the appeal filed by the appellants against the order of the adjudicating authority dated 31-3-2009 has been dismissed. By the said order dated 31-3-2009, the adjudicating authority had confirmed the demand of duty to the tune of Rs. 95,83,749/- along with interest.
4. The dispute in the second matter essentially relates to the claim of differential duty paid in excess in the month of March, 2006 and April, 2006 towards short-payment for the period April 2006 to September 2006.
5. In both the matters, there is also dispute about non-applicability of the principle of unjust enrichment. It is also sought to be contended that the excess duty paid by the appellant being entitled for availing the credit and the payment of duty is by one unit whereas the availment of the credit is by another unit of the same appellants, the entire process is actually revenue neutrality. Reliance is sought to be placed in the decision of the Hon’ble Bombay High Court in the matter of CCE v. Ispat Industries Ltd. 2010 (259) ELT 662, of the Tribunal in Tata Motors Ltd. v. CCE 2011 (269) ELT 415, Hindustan Zinc Ltd. v. CCE 2008 (232) ELT 687, CCE v. Textile Corpn., Marathwada Ltd. 2008 (231) ELT 195, of the Supreme Court in the matter of CCE v. Jamshedpur Beverages 2007 (214) ELT 321, CCE v. Narmada Chematur Pharmaceuticals Ltd. 2005 (179) ELT 276, of the Tribunal in the matter of Mafatlal Industries Ltd. v. CCE 2009 (241) ELT 153, Siddeshwar Textile Mills (P.) Ltd. v. CCE 2009 (248) ELT 290, Excel Rubber Ltd. v. CCE 2010 (261) ELT 439, Bimetal Bearings Ltd. v. CCE 2008 (232) ELT 790 (Tri.- LB).
6. The contentions are disputed by the DR while contending that in the facts and circumstances of the case, the authorities below have taken correct view and reliance is placed in the decision in the matter of Bharat Heavy Electricals Ltd. v. CCE, 2012 (275) ELT 614 (Tri. – Delhi)] by this Tribunal as well as in the matter of ECE Industries Ltd. v. CCE 2011 (274) ELT 100 (Tri. – Delhi)].
7. The entire case is based on principal claim of revenue neutrality and non-applicability of the principle of unjust enrichment. It is undisputed fact that the duty amount was not paid on the due date in relation to the period for which the authority had found short-payment essentially because there was subsequent payment of the said amount, that cannot ipso facto result in revenue neutrality, merely because the appellants are entitled to avail credit in respect of the duty paid. Right to claim arises only after payment of duty and not prior thereto. Being so, for the period the duty remains to be paid, obviously, interest accrues in favour of Revenue. Hence merely because the assessee paid duty subsequent to the date even though the appellants are entitled for credit for such payment of duty that does not result in revenue neutrality. As such, payment of duty after the last due date for the same does not wipe out the liability to pay interest. Being so, unless it is shown that at the time of payment, the entire duty amount along with interest stood paid, the question of application of revenue neutrality cannot arise. In none of the decisions sought to be relied upon this aspect has been considered. Merely because the principle is stated to have been applicable that itself does not amount to laying down the law. The decision of the Hon’ble Bombay High Court in Ispat Industries case, it was held thus – “Since differential duty was paid even before the final assessment as made, the Tribunal has held that the respondent assessee is not liable to pay interest. In our opinion, no fault can be found with the order of the Tribunal”. Obviously therefore, the order is clearly based on the peculiar facts of the case without considering the scope of law of revenue neutrality. Besides, it is also to be noted that sub-rule (4) of Rule 7 of Central Excise Rules, 2002 clearly provides that “The assessee shall be liable to pay interest on any amount payable to Central Government consequent to order for final assessment under sub-rule (3) at the rate specified by the Central Government by notification issued under Section 11AA or Section 11AB of the Act from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof.” The provision of law being very clear, the contention sought to be canvassed contrary to the same can be of no help to the appellants.
8. The Apex Court in Textile Corporation, Marathivada Ltd. case had merely observed that “Admittedly the assessee has paid duty at final stage. If assessee has to pay the excise duty at each and every stage of manufacturing, it would be entitled to modvat credit and the whole exercise would be revenue neutral.” It nowhere lays down the law to the effect that ignoring the statutory provisions that principle of revenue neutrality should be applied. The Apex Court in Jamshedpur Beverages case had observed “It is stated by the counsel appearing for the assessee that the excise duty paid and the modvat credit availed were identical and therefore, consequences of payment of excise duty after availing Modvat credit was revenue neutral. In view of this, the appeal is dismissed leaving the question of law open”. Apparently, what we observed was that availing modvat credit in relation to the duty already paid, the consequences are that it results in revenue neutrality. That does not mean that the Supreme Court has held that irrespective of statutory provisions of law in relation to the interest payment, the assessee can avail the benefit of the principle of revenue neutrality even though the assessee chooses to pay duty in accordance with the provisions of law.
9. In Narmada Chematur Pharmaceuticals Ltd. case, it was merely observed that “It is stated by the learned counsel on behalf of the assessee that the excise duty paid and modvat credit availed of were identical. Therefore, the consequences of payment of excise duty after availing of modvat credit was revenue neutral”. The records do not relate to the issue as to whether in case of late payment of duty irrespective of statutory provisions of law comprised under Rule 7 of the said Rules would result in revenue neutrality.
10. As far as the decisions relied upon by the Department, the DR is justified in drawing our attention to the decision in Bharat Heavy Electricals Ltd. case (supra) as well as in ECE Industries Ltd. In fact, the observations therein in both the decisions squarely apply to the facts of the case in hand.
11. Taking into consideration the facts and circumstances of the case, we do not find a prima facie case having been made out for total waiver of the amount demanded under the impugned order. We, therefore, direct the appellants to deposit 60% of the amount demanded under the impugned order excluding the demand in relation to the amount of interest, within eight weeks from today. For compliance on 4-11-2011.