CX - In case of retrospective levy, interest for period before enactment of provision cannot be demanded – Revenue appeal dismissed: CESTAT
By TIOL News Service
MUMBAI, JUNE 09, 2016: THE JS (TRU-1) letter D.O.F.No. 334/ 3/2011-TRU dated 28.02.2011 pursuant to introduction of Finance Bill, 2011 (enacted on 08.04.2011) is extracted below -
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6. Important Legislative Amendments:
6.11 Parts, components and assemblies of vehicles falling under chapter 87 excluding vehicles of headings 8712, 8713, 8715 and 8716 were notified under section 4A of the Central Excise Act with effect from 27.02.2010. Subsequently, parts, components and assemblies of certain vehicles falling under chapter 84 were also notified under these provisions with effect from 29.04.2010. However, these goods were not simultaneously included in the Third Schedule to the CETA. These are now being included in the Third Schedule retrospectively w.e.f. 27.02.2010 and 29.04.2010 respectively.
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The present proceedings emanate from the above legislative amendments.
While confirming the duty demand against the assessee of Rs.18,63,57,887/- for the period 29.04.2010 to 31.03.2011 and appropriating the same against the amount already paid, the CCE, Pune-I also confirmed/demanded interest amounting to Rs.13,92,270/- in respect of the delayed payment of duty for the period 08.04.2011 to 31.05.2011, in terms of provisions of Section 11ABand appropriated the same against the amount already paid.
However, the CCE, Pune-I dropped the demand of interest (of Rs.1,39,07,609/-) in respect of the period 29.04.2010 to 31.03.2011 as demanded in the SCN.
Against this unfavourable portion of the order, the Revenue is before the CESTAT.
It is submitted - that it is undisputed that as per retrospective effect as per Finance Act, 2011, the duty was levied w.e.f. 29.4.2010, therefore, since this amount was recoverable under Section 11A, the interest leviable under Section 11AB became effective from the date when the duty was payable. There is no exception provided in the statute for non-levy of interest in the circumstances when any duty is levied by statute which is effective retrospectively. Decisions cited in support were Presscom Products - 2011-TIOL-889-HC-KAR-CX, SKF India Ltd. - 2009-TIOL-82-SC-CX etc.
The respondent assessee stated that there was no occasion or reason to pay the excise duty at any date prior to 8.4.2011 i.e. the date of enactment of retrospective levy of duty; therefore, the duty though for the past period was payable but it became payable only after 8.4.2011; the respondent admittedly paid the interest for the period 8.4.2011 till the payment of duty i.e. 31.5.2011, therefore, the interest is not demandable for the period prior to 8.4.2011.
The Bench inter alia observed –
"…We are of the clear view that when the duty became payable only on 8.4.2011, though it is payable for the period prior to 8.4.2011 the duty is recoverable but interest cannot be demanded for the period prior to 8.4.2011. We find that when the duty itself was not leviable during the period before 8.4.2011 which became payable only on 8.4.2011, how the interest can be demanded for the period when duty was not payable. The appellant admittedly paid interest for the delay from 8.4.2011 till the date of payment which is alone is recoverable and not before the said period…."
Noting that the decision cited by the respondent of Premier Industries Ltd - 2009-TIOL-2589-CESTAT-DEL settled the issue and that the judgments cited by the AR catered to significantly different facts, the Bench concluded that interest on retrospective levy of duty as per Finance Act, 2011 is not chargeable for the period prior to date of enactment of Finance Act, 2011 i.e. 8.4.2011.
The impugned order was upheld and the Revenue appeal was dismissed.
(See 2016-TIOL-1376-CESTAT-MUM )
