CX - Just as no law or judgement can prevent tax collector from levying tax in accordance with law, no law or judgement can be allowed to impede tax collector from fulfilling his constitutional obligation to collect only such tax as is authorized by law: CESTAT
By TIOL News Service
MUMBAI, JAN 13, 2017: THIS is a Revenue appeal filed in the year 2005 against an order-in-original passed (in remand proceedings) by the CCE, Thane-I dropping the demand notice.
The dispute pertains to valuation of the chemicals, 'calcium sulfonate' and 'anti-oxidant additive', manufactured by M/s Crescent Catalyst & Chemicals out of 'waste filter cake', supplied by M/s Lubrizol India Ltd without any charge, and cleared to M/s Lubrizol India Ltd at the rate of Rs.34.50 per kg quoted in the tender awarded to the former and on which duty liability was discharged.
Incidentally, M/s Lubrizol India Ltd had been clearing the 'waste filter cake' without discharge of duty liability by claiming it to be a non-excisable item but subsequently, upon advise by the CE authorities, commenced paying duty on an assessable value of Rs.200/- per tonne.
The case of Revenue is that the price adopted by M/s Crescent Catalyst & Chemicals did not represent the true value of the output chemicals as the cost of 'waste filter cakes' supplied by M/s Lubrizol India Ltd had not been included in the computation of the assessable value.
Inasmuch as adopting the 'best judgement rule' in the Valuation Rules, 1975 was invoked and the differential duty for the period May 1996 to March 2001 was computed asRs.47,28,551/- for recovery along with interest and penalty. Penal provisions were also invoked against ShriAjit V Mehta, Director and M/s Lubrizol India Ltd.
In another proceeding initiated against M/s Lubrizol India Ltd for charging duty on 'waste filter cake', in remand proceedings, the demand was dropped by CCE, Belapur on ground of limitation with the additional finding that 'waste filter cake' was not excisable.
Noting the above findings on excisability, the impugned order found that the remand order of the Tribunal had not considered the irrelevance of classification of the input to the issue of valuation of the output chemicals and went on to hold that the demand for recovery of short levy, since [output chemicals were] exempted under notification no. 115/75-CE dated 30th April 1975 extended to solvent extraction industry, would not sustain.
As mentioned, Revenue is in appeal against this order.
The Bench noted that the alleged erroneous assumption (claimed by Revenue in appeal) in the order impugned that the excisability of 'Waste filter cakes' had not attained finality was no longer relevant in view of the fact that the Revenue appeal was dismissed by the Supreme Court and in another subsequent decision, the Tribunal order holding so had also been accepted by the department. Inasmuch as 'waste filter cakes' were not excisable.
The Tribunal further observed that the adjudicating Commissioner may have been at variance with the observations of the Tribunal in remanding the matter but such an assertion is not liable to be held to the detriment of the impugned order in the absence of a challenge to the order on the specific ground of deviation from the terms of remand.
In the matter of the adjudicating authority dropping the proceedings by extending the benefit of notification 115/75-CE, it is the contention of the Revenue that since M/s Crescent Catalyst & Chemicals had been paying duty after classifying their product and had not challenged the duty liability, the benefit could not have been extended by the adjudicating authority. Reliance is placed on the decision in Flock (India) Pvt Ltd. - 2002-TIOL-208-SC-CX.
The CESTAT, while distinguishing the citations relied by the Revenue, made the following observations on the aforesaid submission -
++ undoubtedly, the respondent has been paying duty without questioning the leviability of their output. Had they now sought a re-visit or had the adjudicating authority revisited this accepted position in the impugned proceedings, the thunderous protest of Revenue would have been justifiable. We do not find any contention of respondent seeking a reversal of that tax liability.
++ the adjudicating authority was called upon to decide on the allegation of short-levy. Such short-levy presumes that there is a portion of the duty liability that is yet to be recovered. In such a proceedings, it is open to the noticee to claim that there is no short-recovery by alluding to an excess recovery on the same goods. Such a claim does not adjudicate upon the duty already levied but is limited to protesting the allegation of short-recovery. That is all that has happened here and it is to that fact that the adjudicating authority has drawn attention. When the duty already collected is in excess of that leviable, there is no basis for the taxman to allege further short-recovery . The adjudicating authority does not, in doing so, set aside the duty already paid.
++ just as no law, instruction or judgement can prevent a tax collector from levying a tax in accordance with law, no law, instruction or judgement can be allowed to impede a tax collector from fulfilling his constitutional obligation to collect only such tax as is authorized by law. In the present situation, the collection of the duty thus far has been without authority of law; lack of procedural wherewithal may prevent rectification of that illegality but a judicial mind should confine that illegality to the past without compounding that illegality for all time to come . Subjecting that decision to review and appeal with the sole purpose of perpetuating that illegality bespeaks impropriety. We find that the impugned order cannot be held to have travelled beyond the notice or has conferred a benefit on an assessee sans a procedure in law.
++ as the duty was not leviable, a demand for further recovery of a duty not leviable is without authority of law and must fail. The appeal of Revenue is dismissed.
In passing:
The CESTAT, Member (T) writing for the Bench also conveyed the following pearls of wisdom -
| Central Board of Excise & Customs to undertake a capacity building programme to enable a responsible discharge of the power of review by the authorities subordinate to it so that the ends of law - legality and propriety of adjudication and appellant orders - are met and is not mere knee-jerk reaction to orders that are perceived as detrimental to Revenue. The interests of the State are not furthered by excess collection of revenue but by proper collection of tax as authorised by law. Unless that distinction is clearly and unambiguously instilled in the minds of tax officers, it is the State that will be reviled and the citizenry that will strain against the yoke of unjust levies. |
(See 2017-TIOL-116-CESTAT-MUM)
