M/S Kisan Sahakari Chini Mills Ltd vs Cce, Lucknow

[Arising out of the Order-in-Appeal No. 468/CE/2005 dated 29/11/2005 passed by The Commissioner (Appeals), Central Excise, Lucknow.]

For Approval and signature :

Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri 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 would 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 :

Department Authorities?

M/s Kisan Sahakari Chini Mills Ltd. Appellant

Versus

CCE, Lucknow Respondent

Appearance

None  for the Appellant.

Shri R.K. Grover, Authorized Representative (DR)  for the Respondent.

CORAM : Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

Final Order No. 50092/2015 Dated : 08/01/2015

Per. Rakesh Kumar :-

The facts leading to filing of this appeal are, in brief, as under.

2. The appellant are a sugar mill engaged in the manufacture of sugar and molasses chargeable to Central Excise duty. The period of dispute in this case is October to December 1997. During this period, the appellant, in terms of the orders of Central Government, had cleared 6809 qntl. of sugar from their free sale sugar quota as levy sugar on loan basis by paying duty at the rate applicable for levy sugar. Subsequently, the Central Government paid the difference between the price of levy sugar and price of free sale sugar to the appellant alongwith the element of differential duty and before this, the National Federation of Cooperative Sugar Mills as well as Indian Sugar Association had been notified about this decision of the Government. There is no dispute that the differential duty, that is the duty payable at the rate applicable for levy sugar and at the rate free sugar, that is, Rs. 2,24,697/- had been paid by the appellant on 20th August 2002. The Jurisdictional Assistant Commissioner, however, vide order-in-original dated 27/12/04 confirmed the duty demand of Rs. 2,24,697/- against the appellant under Section 11A (2) of the Central Excise Act, 1944 and appropriated the same amount already paid by the appellant towards this demand. In this order, however, beside the duty, he also demanded interest on this duty under Section 11AB and beside this, imposed penalty of Rs. 5,000/- on the appellant under Rule 173Q (1) of the Central Excise Rules. On appeal being filed by the appellant to the Commissioner (Appeals) against this order of the Assistant Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 29/11/05 upheld the Assistant Commissioners order. Against this order of the Commissioner (Appeals), this appeal has been filed.

3. Today, when this matter was called for hearing, none representing the appellant appeared, though a notice in respect of hearing of this matter today had been issued to the appellant well in time on 21/11/14. It is also seen on earlier occasions also whenever this matter was listed for hearing, none representing the appellant appeared. In view of this, in accordance with Rule 21 of CESTAT Procedure Rules, the matter is being decided ex-parte.

4. Shri R.K. Grover, the learned DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and emphasised that when the Central Government had reimbursed the price differential between the levy sugar and free sugar alongwith the duty, the duty demand has been correctly confirmed upheld by the Commissioner (Appeals) and since the duty had been short paid, the interest under Section 11AB and penalty under Rule 173Q (1) would be attracted.

5. We have considered the submissions of learned DR and have gone through the records.

6. During October to December 1997, the appellant in terms of the directions of the Central Government had cleared certain quantity sugar from their free sale sugar quota as levy sugar on payment of duty applicable to levy sugar. Subsequently, the Central Government decided to restored to the sugar mills, the quantity of free sale sugar cleared as levy sugar and, accordingly, the appellant were paid the differential amount between the price of the levy sugar and the price of the free sale sugar alongwith the differential excise duty. Once the assessee received the element of differential excise duty, that amount, in any case, would become payable to the Central Government. There is no dispute that the appellant have already paid this amount on 20th August 2002. Therefore, so far as the duty demand is concerned, the impugned order has to be upheld.

7. However, as regards the interest under Section 11AB and penalty under Rule 173Q (1), the interest under Section 11AB during that period would be attracted only when any short payment of duty occurred due to fraud, wilful mis-statement or deliberate violation of provisions of Central Excise Act, 1944 or of the Rules made thereunder, but these elements are not present in this case. Therefore, interest liability under Section 11AB would not arise and, hence, the impugned order upholding the levy of interest under Section 11AB being not sustainable has to be set aside. In the circumstances of the case, there is also no justification for penalty under Rule 173Q as this is not the case of deliberate short payment in contravention of the provisions of Central Excise Rules. In view of this, the imposition of penalty would also not be sustainable.

8. In view of the above discussion, while the duty demand of Rs. 2,24,697/- is upheld, the interest under Section 11AB and penalty under Rule 173Q (1) is set aside. The impugned order stand modified as above. The appeal is partly allowed.

(Dictated and pronounced in open court.)

(Rakesh Kumar)

Member (Technical)

(S.K. Mohanty)

Member (Judicial)

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