M/S New Holland Fiat India Pvt. Ltd vs C.C., C.E. & S.Tax, Noida

Arising out of Order-in-Appeal Nos.NOI/EXCUS/000/APPL/57-61/14 dated 18.03.2014 passed by Commissioner of Central Excise (Appeals), & Customs, Noida

For approval and signature:

HONBLE MR. ANIL CHOUDHARY, 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 His Lordship wishes to see the fair copy of the Order? :

4. Whether Order is to be circulated to the Departmental Authorities? :

M/s New Holland Fiat India Pvt. Ltd. APPELLANT(S) VERSUS

C.C., C.E. & S.Tax, Noida RESPONDENT (S)

APPEARANCE

Shri Narendra Singhvi, Adv. for the Appellant (s) Shri Ashok B. Kulgod, A.C. (A.R.) for the Department

CORAM:

HONBLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)

DATE OF HEARING & PRONOUNCEMENT : 19. 10. 2015

ORDER NO.__________________________

Per Mr. Anil Choudhary :

The Appellant, New Holland Fiat India Pvt. Ltd., are manufacturer of motor vehicles and its part and is in appeal against common order in appeal number NOI/EXCUS/000/APPL/57-61/14 dated 18.03.2014 passed by Commissioner of Central Excise (Appeals), & Customs, Noilda whereby the appropriation of the rebate amount relating to the period January and February 2013 as well as December 2012, has been made against the liability for interest relating to prior period of their Bombay unit, which have been upheld by the impugned order.

2. Brief facts are that the appellant manufactures and exports tractors and its part having its manufacturing unit at Noida and is registered under the provisions of Central Excise Act, being entitled to rebate under rule 18 of the Central Excise rules read with notification number 19/2004  CE dated 6/9/2004 applied for refund vide 5 different refund claims which were adjudicated vide order-in-original Nos. 471 473/R/AC/N-IV/1314 dated 26/9/2013 and 507  508/R/AC/N-IV/1314 dated 22/10/2013 totaling an amount of Rs. 53,08,585. The adjudicating authority vide order in original observed that vide judgement of Honourable Supreme Court dated 29/8/2012 pronounced in civil appeal number 1648  1649 of 2004 in the case of CCE, Mumbai II Vs Fiat India Pvt. Ltd. (now known as M/s New Holland Fiat India Pvt. Ltd.) has allowed the appeal of revenue against the order of this Tribunal dated 21/11/03 and restored the order-in-original passed by the Asstt. Commissioner, Mumbai II, resulting into confirmation of demand of Central Excise amounting to Rs. 3,11,16,49,260/- which has been realized from the party by way of appropriation of refund/rebate claims and deposit by the party in compliance of Appendix  I dated 16/10/12 and Appendix  II dated 8/11/12 issued under section 142 (i) (c) (ii) of the Customs Act by the Asst Commissioner of Central Excise, Division Kurla:, Mumbai II and Asstt Commissioner of Central Excise, Division IV, Noida respectively.

However the liability of interest amounting to Rs. 24,42,76,163/- against the assessee is lying pending with the Additional Commissioner Central Excise Mumbai II. In view of the ruling of the Apex Court, it can be said that order in original has attained finality. In view of the above, the Additional Commissioner of Central Excise Mumbai II, vide his letter dated 11/6/13 received in his office on 17/6/13 has requested for recovery of interest also in terms of Boards Circular number 208/42/96  CX dated 2/5/1996 from the assessee by way of adjustment and appropriation of any money owing to such person under the jurisdiction of Division IV of Central Excise, Noida. Accordingly the adjudicating authority observed that section 142 of the Customs Act as made applicable to Central Excise Act in the like matters read with Notification No. 68/63CE dated 4/5/1963, as amended, in such matter, according to which, the proper officer may deduct or may require any other officer of the Customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other officer of the Customs/Central Excise.

And accordingly, it was ordered that the amount of rebate payable in terms of rule 18 of the Central Excise Rules read with section 11B (2) of Central Excise Act, 1944, in cash is adjusted in view of the confirmed demand of interest liability.

3. Being aggrieved, the appellant preferred an appeal before the learned Commissioner (Appeals) who, vide the impugned order, upheld the adjustment. Being aggrieved, the appellant is in appeal before this Tribunal.

4. The ld. Counsel for the appellant has raised the following grounds. The 1st ground urged is that the appropriation is made without any notice to the appellant of the intended adjustment under the powers as vested under section 11 of Central Excise Act read with Section 142 of the Customs Act read with the notification. The 2nd ground urged is that the enabling notification, that is notification number 68 of 1963 as amended, have not made Section 142 (1)(a) of Customs Act applicable to the Central Excise act, which reads as follows:

the proper officer may deduct or may require any other officer of Customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or such other officer of Custom.

It is argued that in absence of the enabling provision to adjust any amount payable in cash with the officer of Central Excise the adjustment is fully without jurisdiction and fit to be set aside. The next ground urged is that the demand was raised for interest, pursuant to payment of the full amount of principle duty payable, as crystallized vide order of the Honourable Supreme Court in August 2012 and pursuant thereto the appellant challenged those letters demanding interest in writ petition number 3901 of 2013 before the Honourable Bombay High Court which was filed on 18/4/13. The said writ petition was entertained and the same was finally decided in favour of revenue vide order dated 29/9/2014. He vehemently argued that on the date of adjustment made by the adjudicating authority, the said liability of interest was sub-judice and could not have been said to be crystallized and as such the adjustment is bad as only demands which are attained finality and/or crystellized can be collected by way of certificate proceedings, can only be recovered under the special powers of recovery vested in the authority under section 142 of the Customs Act read with section 11 of the Central Excise Act.

The ld. Counsel also relies on the ruling of the Honble Madhya Pradesh High Court in the case of National Industries Ltd. Vs Union of India 2001 (134) ELT 616 wherein adjustment of refund of the amount of pre-deposit was made when the appeal was pending consideration before the appellate authority by taking recourse to the provisions of Section 11. In the writ petition challenging the action the Honourable High Court did not give the approval of the action of the authority to take the resort to section 11 even before the order of adjudication had attained finality as the appeal was pending consideration before the appellate authority. More so, in view of the CBEC circular and instructions to the effect that it is not fair and just to proceed with recovery proceedings while application for stay of the impugned order and/or consideration was pending before the appellate authority and as such the order adjusting the amount of pre-deposit is held to be bad and quashed. Further, reliance is placed on the ruling in the case of M/s Hindustan Petroleum Corporation Ltd. Vs. Commissioner 2003 (156) ELT 404, where the adjudication order was subject to appeal and stay application was pending before the Tribunal.

It was held that amount cannot be said to have become recoverable or due from the appellants. Further, reliance is placed on the ruling in the case of KEC International Ltd. Vs. Commissioner 2014 (310) ELT 615, where the amount of interest was adjusted against the amount of rebate, this Tribunal, held that it is not permissible to adjust unconfirmed demand of interest and further for recovery of any demand from an assessee the principles of natural Justice are to be followed, which includes issuance of show cause notice, affording reasonable opportunity to the assessee to put forward its case. The ld. Counsel also points out from the final order dated 29.9.14, the Honourable Bombay High Court in their order observed that mere ommission to mention of interest by the adjudicating authority in its order dt. 31.01.2002 will not entitle to the petitioners to avoid liability to pay interest after the order of the Supreme Court. Moreover it was also observed that the amount of interest arises from negotiated installments with the revenue. Accordingly the ld. Counsel prays for setting aside the impugned order so far as adjustment having been made without notice to them, under the provisions of section 11 of the Central Excise Act read with section 142 of the Customs act.

5. The ld. DR relies on the impugned order. He further states that even otherwise the amount of interest have attained finality as the order of the Honourable Bombay High Court have been further conformed in the matter of interest by the Apex Court vide the order dated 1.5.2015 reported at 2015 (322) ELT A227 (SC). He further states that even if the adjustment by the impugned order is set aside the assessee is liable to pay the interest and the same may be found adjustable even today or in the future.

6. Having considered the rival contentions I find that so far the first ground is concerned as regards the appropriation without notice to the appellant, I hold that the appellant was required to be given notice before adjustment of any amount from the rebate for subsequent period, Section 142 read with section 11, being the special power of recovery (garnishee proceedings). So far the next ground is concerned that clause (a) of sub-section 1 of section 142 of the Customs Act, 1962, which enables the proper officer to deduct or to require any other officer of Customs to deduct the amount so payable from any money owing to such person which may be under the control of the proper officer or any such other officer of Customs. In view of the fact that sub-clause (ii) of clause (c) of section 142 (1), has been made applicable to the provisions of Central Excise which includes all movable or immovable which can be attached for the purposes of recovery, I hold that the cash is movable property and this ground is decided in favour of the revenue and against the appellant. So far the 3rd ground is concerned that the amount of interest was sub-judice and had not attained finality and as such, could not be recovered by way of special mode of recovery, I hold that the recovery is bad as the matter was sub-judice before the Honourable Bombay High Court on the date, the adjudicating authority made the adjustment of the rebate with the amount of interest for the previous period.

7. Thus, the appeals are allowed and the impugned order is set aside. The adjudicating authority is directed to restore the amount which have been adjusted in order-in-original and it is held that the appellant will be entitled to consequential relief, if any, in accordance with law.

(Dictated and pronounced in the open Court)

Sd/ (ANIL CHOUDHARY) MEMBER (JUDICIAL) mm

8 Ex. Appeal Nos.54450-54454/14