Chhata Sugar Co. Ltd vs C.C.E., Lucknow

[Arising out of Order-in-Appeal No.18-CE/06 dated 22.02.2006 passed by the Commissioner (Appeals), Customs & Central Excise, Lucknow].

For approval and signature:

HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

1. Whether Press reporters may be allowed to see the

order for publication as per Rule 27 of the CESTAT

(Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the

CESTAT (Procedure) Rules, 1982 for publication in

any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy

of the Order?

4. Whether Order is to be circulated to the Departmental

authorities?

__________________________________________________

Chhata Sugar Co. Ltd. Appellant

Vs.

C.C.E., Lucknow  Respondent

Present for the Appellant : Mr. B. Garg, Advocate

Ms. Pinky Arora, Advocate

Present for the Respondent: Mr.Yashpal Sharma, DR

Coram:HONBLE MR. RAKESH KUMAR, MEMBER (TECHNICAL)

HONBLE MR.S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 01/01/2015

FINAL ORDER NO. 50323/2015

PER: RAKESH KUMAR

The appellants are manufacturers of sugar. The period of dispute is for November, 1997 and December, 1997. During this period, in terms of the policy of the Central Government and orders issued in this regard, the appellant had cleared certain quantity of sugar out of free sale sugar quota as levy sugar on payment of Central Excise Duty applicable to levy sugar. This quantity of the free sale sugar had been diverted as levy sugar on loan basis. Subsequently, the diversion of the free sale sugar as levy sugar on loan basis during November and December, 1997 was converted by the Central Government into purchase of free sale sugar and the appellant were paid differential amount alongwith the differential duty. The differential duty was paid by the Appellant on 29.10.2001. On 31.10.2002, the department issued a show cause notice for charging of interest on the differential duty under section 11AB and imposition of penalty under section 11 AC. The jurisdictional Assistant Commissioner vide Order-in-Original dated 08.08.2005 confirmed the interest demand under section 11 AB and also imposed penalty of Rs.3,21,321/- equal to the differential duty under section 11AC. On appeal being filed to Commissioner (Appeals), Commissioner (Appeals) vide order in appeal dated 22.02.2006 set aside the penalty but confirmed the interest demand under Section 11AB. Against this order of the Commissioner (Appeals), this appeal has been filed.

2. Heard both the sides.

3. Shri Bipin Garg, Advocate, the ld. Counsel for the appellant, pleaded that since the clearances had been made during November-December, 1997 period in respect of which differential duty had been paid on 29.10.2001, and since in this case the alleged short payment was not due to any fraud, wilful misstatement, suppression of fact etc. on the part of the assessee, the interest liability under section 11AB would not arise, as during the period prior to 11.5.2001, the interest liability under Section 11 AB arose only in those cases where the short levy / non-payment or erroneous refund of duty was on account of fraud, wilful misstatement, suppression of fact or deliberate violation of Provisions of Central Excise Act, 1944 or of the Rules made there under with intent to evade payment of duty, that Sub-Section (2) of section 11AB clearly states that the provisions of sub-section (1) shall not apply to the cases where the duty had been paid before the date on which the Finance Bill, 2001 received the assent of the precedent, that is, during the period prior to 11.05.2001, that in any case, since the SCN had been issued on 31.10.2002 i.e. after expiry of one year from the date of payment of duty and since longer limitation period is not applicable, in these circumstances the interest demand is time barred, that the limitation period prescribed in Section 11A is applicable for demand of interest also in terms of the judgement of the Honble Delhi High Court in the case of Hindustan Insecticides Ltd. Vs. CCE, LTU reported in 2013 (297) ELT 332 (Del.) and that in view of this, impugned order upholding the interest demand under section 11AB is not sustainable.

4. Shri. Yashpal Sharma, the ld. DR defended the impugned order reiterating the findings of the Commissioner (Appeals).

5. We have considered the submissions from both the sides and perused the records.

6. From the circumstances of the case, the alleged short payment cannot be said to be attributable to any fraud, wilful misstatement, suppression of facts or deliberate violation of the provisions of the Central Excise Act, 1944 or of the Rules made there under with intent to evade payment of duty. During the period prior to 11.05.2001, the levy of interest under section 11AB was linked with the short levy, non-payment or erroneous refund being on account of fraud, wilful misstatement suppression of facts etc. Since these elements are not present in this case and since for this reason only, the Commissioner (Appeals) has set aside the penalty under section 11AC, there would not be any interest liability in this case, as the alleged short payment is in respect of the clearances made prior to 11.05.2001. Moreover, since the elements for invoking longer limitation period under proviso to Section 11A (1) are not there, in any case, the interest demand made after expiry of one year from the relevant date is time barred, in view of the Honble Delhi High Court in the case of Hindustan Insecticides Ltd. (supra). The impugned order is, therefore, not sustainable. The same is set aside. The appeal is allowed.

[Dictated & Pronounced in the open Court].

(S.K.MOHANTY) (RAKESH KUMAR)

MEMBER (JUDICIAL) MEMBER (TECHNICAL)

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