By TIOL News Service

MUMBAI, SEPT 17, 2018: 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 -

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.

The Third Schedule requires one to refer to Section 2(f)(iii) of the CEA, 1944, which reads -

(f) "manufacture" includes any process,-

i.x x x; ii.x x x; or

iii.which, in relation to the goods specified in Third Schedule involves packing or re-packing of such goods in a unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer,

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 11AB and 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.

Revenue was aggrieved with this portion of the order and filed an appeal before CESTAT contending that since duty was levied retrospectively w.e.f 29.04.2010, interest follows suit.

The assessee submitted that there was no occasion or reason to pay the excise duty at any date prior to 08.4.2011 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 CESTAT agreed with the submission made by the assessee and dismissed the Revenue appeal. While doing so, the Tribunal placed reliance upon the decision of its Coordinate Bench in the case of Premier Industries Ltd. - 2009-TIOL-2589-CESTAT-DEL.

We reported this order dated 26th May 2016 as 2016-TIOL-1376-CESTAT-MUM.

Not willing to accept this Tribunal order, the Revenue filed an appeal before the Bombay High Court.

When the Revenue appeal was heard on 20 th August 2018, the decision in Star India (P). Ltd. - 2005-TIOL-163-SC-ST-LB was cited by the Respondent assessee to contend that the Appeal should not merit admission.

The Bench dictated the order in Court that in view of the said apex court decision, the Appeal is not maintainable. However, while correcting the dictated order i.e. before signing, the Bench realized, on re-examining the decision of the Apex Court in Star India (P) Ltd. (supra), that the issue may require reconsideration; that the apex court decision is distinguishable and that the Bench would be required to examine the Finance Act, 2011 to find out whether the retrospective amendment was clarificatory or not. Accordingly, the parties were informed that the issue would require re-examination and the matter would be reheard.

In terms of the order dated 27 th August 2018, the matter was posted to 10 th September 2018 when the counsel for the Revenue was to also inform the Court as to whether the appeal filed by the Revenue before the Madhya Pradesh High Court against the order of Tribunal in Premier Industries Ltd. (supra) (relied upon by the Tribunal while deciding the impugned matter) had been admitted and the final order, if any, passed thereon.

On the scheduled date, the counsel for the Revenue informed that the Revenue appeal in Premier Industries case (supra) had been admitted by the Madhya Pradesh High Court on 26 February 2009 but the appeal is awaiting final disposal.

The respondent assessee opposed the Revenue appeal by submitting that the Finance Act, 2002 did not have any validation clause and, therefore, there is no difference with the Finance Act, 2011 which arises for consideration in this appeal.

The High Court observed -

"8. …, we find that the Apex Court in Star India (P)Ltd. (supra) very clearly makes reference to the validation clause in Finance Act, 2002. Besides, in the case of Star India (P) Ltd.(supra), the demand of tax was consequent to the validation provision contained in Finance Act, 2002. The Court held that bringing to tax the Broadcasting service by the Finance Act, 2002 was not clarificatory. Therefore, tax was being imposed for the first time, thus no interest. The submission on behalf of the Respondent is to clarify the Apex Court's decision in Star India (P) Ltd., [supra] with the aid of the Finance Act, 2002 and the Explanatory Notes. This, can be considered at the final hearing. We also notice the fact that the decision in Star India (P) Ltd., [supra] was available when the impugned order dated 26th May, 2016 of the Tribunal was passed. However, no reference was made by the parties to it. In fact, we find that the impugned order of the Tribunal merely followed the decision of its Coordinate Bench in Commissioner of Central Excise, Indore v/s. Premier Industries Ltd.,-2009-TIOL-2589-CESTAT-DEL which is now a subject matter of pending appeal before the Madhya Pradesh High Court. Thus, the issue raised here would require detailed consideration."

In fine, the Revenue Appeal was admitted.

(See 2018-TIOL-1919-HC-MUM-CX)