Madhuri Steels vs Commissioner Of Central Excise

[Arising out of Order-in-Appeal No.125/2005 TRY (ADK) dt. 23.8.2005, OIA No.126/2005-TRY (ADK) dt. 23.8.2005 and OIA No.127/2005-TRY (ADK) dt. 24.8.2005 passed by the Commissioner of Central Excise (Appeals), Tiruchirappalli]

Madhuri Steels Appellant

Versus

Commissioner of Central Excise, Trichy Respondent

Appearance:

Shri M.Kannan, Advocate For the Appellant Shri M. Rammohan Rao, DC (AR) For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :17.6.2015

FINAL ORDER No.40647-40649/2015

Consequent to the order of Hon'ble Madurai Bench of Madras High Court in CMA (MD) No.353 to 354/2009 dt. 28.1.2014, all the three appeals are taken up together.

2. The brief facts of the case relates to demand of interest against the confirmed demand of excise duty. The adjudicating authority has confirmed the demand vide two separate OIOs of same dated 8.10.1998 and another OIO dt. 4.1.2000. On appeal, Commissioner (Appeals) upheld the impugned order. Thereafter, appellants paid the entire excise duty. However, they have not paid the interest amount. The Range Superintendent of Central Excise informed them vide letter OC No.265/2005 & 268/2005 both dt. 1.7.2005 that appellant has to pay interest on the amount already confirmed and paid by them. Against the letter of Range Superintendent, they filed appeal before Commissioner (Appeals) who rejected their appeal. On appeal before this Tribunal, the Tribunal vide Final order No.1130 to 1132/08 dt.3.10.2008 dismissed the appeal No.E/738/2005 for non-compliance. The remaining appeals (E/737 & E/739/2005) were dismissed on merits. Against this Tribunal's order, appellant filed C.M.As before the Hon'ble Madurai Bench of High Court of Madras in CMA (MD) Nos.353 to 354/2009 and the Hon'ble High Court by an order dt. 28.1.20104 set aside Tribunal's final order and remanded the matter to Tribunal with a direction to pass suitable orders on merit. Accordingly, the appeals were restored.

3. Ld. Advocate for the appellant submits that Commissioner (Appeals) in his order has not passed detailed order but dismissed the appeals on the ground that the appellants have not filed appeal against OIO whereas the appellant filed appeal against letter of Superintendent and also dismissed on merits. He further submits that interest cannot be demanded beyond the time limit of one year whereas the Superintendent letter dated 1.7.2005 demanded interest. He relied on the Hon'ble Supreme Court's decision in the case of Commissioner of Trade Tax Vs Kanhai Ram Thekedar  2005 (185) ELT 3 (S.C).

4. On the other hand, Ld. A.R reiterates the impugned orders and also submits that interest under Section 11AA is automatic as the demand has been confirmed under Section 11A of Central Excise Act. There is no time limit is applicable. He relied on the following case laws :-

(i) CCE & C Aurangabad Vs Padmashri V.V.Patil S.S.K. Ltd. - 2007 (215) ELT 83 (Bom.)

(ii) CST Ahmedabad Vs Pepsi Cola India Mkg.Co.

2007 (8) S.T.R. 246 (Tri.-Ahmd.)

(iii) Padmashri V.V.Patil SSK Ltd. Vs Commissioner 2008 (224) ELT A34 (SC)

(iv) Bisleri International Vs CCE Chennai 2009 (241) ELT 556 (Tri.-Chennai)

(v) CCE Vizag Vs Anam Electrical Mfg.Co.

2013 (294) ELT 434 (Tri.-Bang.)

5. After hearing both sides, I find that the demand has been confirmed by the adjudicating authority on 8.10.98 and 4.1.2000. The demand was confirmed under Section 11A of the Central Excise Act whereas appellants paid the amount only during 2004 and 2005 that too in installments. Appellant's contention that interest cannot be demanded beyond the period of one year is not justified as on perusal of letter issued by the Range Superintendent in OC No.268/2005 dt. 1.7.2005, I find that the Superintendent has only quantified the interest as per the Orders-in-Original and only requested to pay the interest. This letter cannot be construed as demand of interest. I further find that SCN No.4/98 dt. 2.3.98 was issued wherein the appellants have been asked to show cause before Asst. Commissioner of Central Excise as to why Central Excise duty of Rs.3,68,850/- should not be demanded as per Section 11A of Central Excise Act with appropriate interest as per the provisions of Section 11AA of the said Act. Since the SCN itself raises demand of Central Excise duty under Section 11A along with interest, there is no question of any further demand of interest. The Superintendent only quantified the interest as per the adjudication order. Appellant's reliance on Commissioner of Trade Tax Vs Kanhai Ram Thekedar  2005 (185) ELT 3 (S.C) is not applicable to the present case as it is distinguishable as in the above case, demand of interest was raised by invoking extended period whereas in the present case, duty and interest has been demanded in the SCN itself.

6. On the other hand, Hon'ble Bombay High Court in the case of CCE Vs Padmashri V.V.Patil S.S.K. Ltd. (supra) has clearly held that interest is chargeable once the demand is confirmed under Section 11A. Once the interest is charged in the original order, there is no discretion to waive the same. The relevant paragraph 10 of the High Court's order is reproduced as under :-

"10. So far as? interest u/s. 11AB is concerned, on reference to text of Section 11AB, it is evident that there is no discretion regarding the rate of interest. Language of Section 11AB(1) is clear. The interest has to be at the rate not below 10% and not exceeding 36% p.a. The actual rate of interest applicable from time to time by fluctuations between 10% to 36% is as determined by the Central Government by notification in the Official Gazette from time to time. There would be discretion; if at all the same is incorporated in such notification in the gazette by which rates of interest chargeable u/s. 11AB are declared. The second aspect would be whether there is any discretion not to charge the interest u/s. 11AB at all and we are afraid, language of Section 11AB is unambiguous. The person, who is liable to pay duty short levied/short paid/non-levied/unpaid etc., is liable to pay interest at the rate as may be determined by the Central Government from time to time. This is evident from the opening part of sub-section (1) of Section 11, which runs thus :

Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as determined under sub-section (2) or has paid the duty under sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate ........ The terminal part in the quotation above, which is couched with the words shall and be liable clearly indicates that there is no option. As discussed earlier, this is a civil liability of the assessee, who has retained the amount of public exchequer with himself and which ought to have gone in the pockets of the Central Government much earlier. Upon reading Section 11AB together with Sections 11A and 11AA, we are of firm view that interest on the duty evaded is payable and the same is compulsory and even though the evasion of duty is not mala fide or intentional."

Against the above High Court's order, the assessee filed S.L.P. before the Hon'ble Supreme Court. The Apex court while admitting the S.L.P. refused to grant stay of the High Court's order as reported in 2008 (224) ELT A34(SC). Respectfully following the Hon'ble High Court decision (supra), impugned orders are upheld. All the appeals are dismissed.

(Dictated and pronounced in open court)

(R. PERIASAMI) TECHNICAL MEMBER

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