From : http://lawcrux.org/data4T/cl/clhigh/69612.htm
2009 (235) ELT 0818 (Raj.) 2009 (091) RLT 0890 (Raj.)
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
N.P. Gupta and Deo Narayan Thanvi, JJ.
Arora Products
Versus
Addl. Commissioner of Central Excise
Central Excise Appeal No. 6 of 2005, decided on 19-3-2008
Cases Quoted -
Commissioner v. Machino Monteil - 2006(07)LCX0133 Eq 2006 (202) ELT 0398 (P & H) = 2006(07)LCX0133 Eq 2006 (004) STR 0177 (P& H) - Referred [Paras 5,6,10,12]
Commissioner v. Om);ar Steel Tubes Pvt. Ltd. - 2007(08)LCX0328 Eq 2008 (221) ELT 0200 (P & H) - Distinguished [Paras 5,6,12]
Raj Spinning & Weaving Mills Ltd. - Referred [Para 14]
Union of India v. Perfect Thread Mills Ltd. - 2009 (234) ELT 0049 (Raj.) - Referred [Paras 4,6,14]
Union of India v. T.P.L. Industries Ltd. - 2007(03)LCX0337 Eq 2007 (214) ELT 0506 (Raj.) - Relied on [Paras 4,6,13]
Advocated By -
Shri Anjay Kotharijor the Appellant.
S/Shri Rishabh Sancheti and V.K. Mathur, for the Respondent.
[Order per : N.P. Gupta, J.]. -
This appeal has been filed by the assessee against the impugned judgment of the learned Tribunal dt. 15-4-2004. The appeal was admitted on 24-5-2005, by framing the following substantial questions of law :-
"(i) Whether any discretion vests on the authorities under the Central Excise Act in quantifying the penalty imposable under Section 11 AC of the Central Excise Act, 1944?
(ii) Whether in appeal filed by the Revenue against the order of the Commissioner of Central Excise (Appeals) setting aside the penalty levied against the assessee, the Tribunal was justified in not entertaining the plea of the assessee that in case appeal is allowed, the quantum of penalty may be reduced, on the ground that no cross-examination has been filed?
(iii) Whether mens rea in any form is part of consideration before penalty under Section 11 AC can be imposed?"
2. We have heard learned Counsel for the parties.
3. The skeleton facts are, that on 5-10-2001, during course of transit check, vehicle No. RJ1G-4585 was intercepted, and on checking it was found that it was carrying 20 bags (585 Kgs) chewing tobacco (Natraj Brand) registered under the name and brand, being product of the assessee, was not carrying the necessary invoice. Thereupon the factory was visited, invoices were checked, and then, on 1-4-2002 show cause notice was issued to the assessee. The learned Additional Commissioner after completing all necessary proceedings passed the order dt. 25-6-2002, imposing the penalties mentioned therein. Against that order an appeal was filed, which was partly allowed by the learned Commissioner (Appeals), and the penalty imposed under Section 11 AC, being penalty equal to duty, was set aside, on the ground, that mens rea to evade duty was conspicuously absent. For that the learned Commissioner relied upon certain facts and circumstances. Against this order the Department filed appeal before the learned Tribunal, and the learned Tribunal allowed the same, finding, that the plea of the assessee, that the slip was left by the proprietor of the respondent firm with the Munshi, to issue the excise invoice, but the Munshi did not issue the same, being unfounded, and unappealable to reason, therefore, the order was set aside.
4. Arguing the appeal, learned Counsel for the assessee relied upon two judgments of this Court; one being in D.B. Central Excise Appeal No. 16/06 Union of India v. M/s. T.P.L. Industries Ltd. & Ors., decided on 2-3-2007 - 2007(03)LCX0337 Eq 2007 (214) ELT 0506 (Raj.) which judgment was followed in another D.B. Central Excise Appeal No. 41/2006, Union of India v. M/s. Perfect Thread Mills Ltd., decided on 10-8-2007 [2009 (234) ELT 0049 (Raj.)], and contended, that in view of the provisions of Section HAC(2b), since the assessee had deposited the requisite duty, even before issuance of show cause notice, no penalty under Section 11 AC could be imposed, and therefore, the impugned order of the learned Tribunal is liable to be set aside.
5. On the other hand, learned Counsel for the respondent relied upon two judgments of Punjab and Haryana High Court; one being in Central Excise Appeal No. 13 of 2005, decided on 25-7-2006, reported in 2006(07)LCX0133 Eq 2006 (202) ELT 0398 (P&H) = 2006(07)LCX0133 Eq 2006 (004) STR 0177 (P&H), Commissioner of Central Excise v. Machino Mon-tell (I) Ltd., and the other being in Commissioner of Central Excise v. Omkar Steel Tubes (P) Ltd. reported in 2007(08)LCX0328 Eq 2008 (221) ELT 0200 (P&H), mis judgment is rendered on 28-8-2007, to contend, that mere payment of duty before issuance of show cause notice, cannot be a ground to contend, that penalty under Section 11 AC could not be imposed.
6. We have heard learned Counsel for the parties, and have gone through the impugned judgments, and the cases cited at the Bar.
7. Before proceeding further, it may be observed, that as appears from the order of the learned Additional Commissioner dt. 25-6-2002, that the duty was paid by the assessee, on 8-10-2001.
8. Thus all said and done this much is not in dispute, that the leviable excise duty had been paid before issuance of show cause notice, inasmuch as, as observed above, show cause notice was issued on 1-4-2002, and the duty was deposited vide TR-6 Challan No. 13, dated 8-10-2001.
9. Since the only question argued before us is, on the anvil of non-leviability of penalty under Section 11 AC, in view of the provisions of Section 11A(2B), we need not go into the question as framed in the order dt. 24-5-2005, and decide the appeal only on the question, as to whether on the face of provisions of Section 11A(2B), penalty under Section 11AC can be imposed, or not.
10. We propose to first take up the cases cited on behalf of the respondent being in Machino Montell (I) Ltd.'s case. Learned Counsel laid much stress on paras 7 and 8 thereof, wherein it has been held, that the provisions of Section 11 AC incorporates liability to pay penalty in the situation mentioned there^ and once a case is covered by the situation mentioned in the Section, mere posit, prior to issuance of show cause notice under Section 11A of the Act, will not necessarily negate the situation mentioned in the said section. In that case the matter related to the year 1999, and show cause notice was issued on 19-6-200, while the amount was deposited under protest on 23-5-2001. Then, in para 8 the submission of the assessee has been noticed, on the anvil of Section 11A(2B) and Section 11A(2C), interpreted the prohibition against imposition of penalty in that event of deposit having been made prior to issuance of show cause notice, and the submission of the Revenue was recorded, to the effect, that reliance was placed on explanation, which limited the applicability of sub-section 2B. However, the Bench did not go into the question, by observing, as under :-
"....we need not go into this question in view of Sub-section 2C of Section 11 of the Act (sic 11 A), which makes it clear that subjection 2B will not apply where duty has become payable prior to the date on which Finance Bill, 2001 was passed. Present case being governed by sub-section 2C of Section 11, issuance of notice under Section 11 was not barred."
11. We may at once observe, that the Finance Bill, 2001 became Finance Act No. 14 of 2001, w.e.f. 11-5-2001, while in the present case, as noticed above, the instant case relates to 5-10-2001, which is little short of five months later than the commencement of Finance Act of 2001. In that view of the matter, per force this judgment itself, so also in view of the language of sub-sections (2B) and (2C), the bar of Section 2B is clearly attracted.
12. Then, so far as Omkar Steel Tubes (P) Ltd.'s case is concerned, that was a case in which the appeal of the revenue was dismissed by recording a finding, question of mens rea in favour of the assessee. Then, reference was made to Machino Montell's case, in the manner, that the Tribunal below had relied upon the judgment in Machino Montell's case, which was over turned by the Division Bench of the Court, vide judgment dt. 25-7-2006, and therefore, mere fact, that duty has been paid before issuance of show cause notice, would not result into non-application of Section 11AC, and the penalty could still be imposed. From this judgment, it is not clear, as to what was the relevant date, inasmuch as in the earlier part we have found, that the order confirming the duty under Section 11A of the Act was passed; by the adjudicating authority on 13-8-2005. Then, the relevant thing to be noticed is, as observed above, the Machino Montell's case was a case on facts, depending upon facts of its own, relating to falling within a particular time zone, viz. as to whether it falls within a period before the date on which the Finance Bill received assent of the President, or within the time zone subsequent thereto. Since in the case in hand, the matter relates to the subsequent date, this judgment cannot help the Revenue, on any stand point.
13. Then a look at the judgment in M/s. T.P.L Industries' case, cited by the learned Counsel for the appellant, makes it clear, that a positive finding has been given therein as under :-
"The proposition appears to be well settled that where the duty has been deposited before issuance of show cause notice under Section 11A & Section 11AB of the Central Excise Act, 1944, no action under Section 11AC of the said Act for imposition of penalty can be initiated or taken. The reason is obvious. As on the date show cause notice is issued, there is no short levy of Duty for which such notice can be issued."
14. May be, that in the two cases, decided by this judgment, as we get from the judgment, that in one of the appeals decided thereby, being that in the case of M/s. Raj Spinning & Weaving Mills Ltd., even the show cause notice was given on 27-3-2001, and therefore, to that extent, the proposition may be open to some doubt on the face of language of Section 11A(2C), but then, the judgment in M/s. Perfect Thread Mills Ltd. related to surprise visit to the factory conducted on 10/11-1-2003, obviously after receipt of the assent of the President to the Finance Bill of 2001, and as observed above, the case in hand is related to that period.
15. In that view of the matter, in our view, on the face of a combined reading of provisions of Sections 11A(2B) and (2C), in view of the fact, that the matter relates to the period subsequent to receipt of the assent of President to the Finance Bill, 2001, in view of the fact, that leviable duty has been deposited immediately on 8-10-2001, while show cause notice was issued on 1-4-2002 only, no penalty under Section 11AC could be imposed.
16. Accordingly, the question stands answered. The appeal is allowed. The impugned judgment of the learned Tribunal is set aside, and the appellate order of the learned Commissioner Annexure-2 dt. 1-10-2002, is restored.
Equivalent 2009 (235) ELT 0818 (Raj.)
Equivalent 2009 (091) RLT 0890 (Raj.)
Showing posts with label Central Excise. Show all posts
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Saturday, August 1, 2009
Thursday, July 30, 2009
2009 (233) ELT 0311 (Raj.) 2009 (013) STR 0119 (Raj.) 2009 (090) RLT 0761 (Raj.)
from : http://lawcrux.org/data4T/cl/clhigh/68647.htm
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
N.P. Gupta and Kishan Swaroop Chaudhari, JJ.
Union of India
Versus
Amit Kumar Maheshwari
Central Excise Appeal Nos. 74 and 70 of 2006, 3, 26 and 54 of 2007, decided on 8-12-2008
Cases Quoted -
Amit Kumar Maheshwari v. Commissioner - 2006(02)LCX0134 Eq 2006 (002) STR 0506 (Tribunal) - Approved [Paras 4,18,19,31)
Arc. Dinesh Burad v. Commissioner - 2007(05)LCX0407 Eq 2008 (011) STR 0250 (Tribunal) - Approved [Para 23]
A.R. Sandeep C. Sikchi v. Commissioner - 2006(09)LCX0148 Eq 2006 (004) STR 0587 (Tribunal) - Approved [Para 22]
Bharti Telecom Ltd. v. Commissioner - 2001(11)LCX0012 Eq 2001 (134) ELT 0327 (S.C.) - Noted [Para 14]
Bohra Pratisthan Pvt. Ltd. v. Commissioner - 2006(12)LCX0267 Eq 2007 (008) STR 0278 (Tribunal) - Approved [Para 39]
Care Electronics Ltd. v. Commissioner - 2007(03)LCX0246 Eq 2007 (007) STR 0273 (Tribunal) - Approved [Para 25]
CIT, Delhi v. Modi Spinning and Weaving Mills Co. Ltd. -1992 Suppl (1) SCC 32 - Distinguished [Para 17]
C.K. Gangadharan v. Commissioner - 2008(07)LCX0024 Eq 2008 (228) ELT 0497 (S.C.) - Noted [Paras 39,40]
Commissioner v. Bharat Security Services and Worker's Contractor - 2005(06)LCX0114 Eq 2005 (188) ELT 0454 (Tribunal) = 2005(06)LCX0114 Eq 2006 (003) STR 0703 (Tribunal) Approved [Paras 4,18,19, 21, 22, 23, 24, 25, 28, 29, 31, 37]
Commissioner v. Industrial Army - 2006(02)LCX0184 Eq 2006 (003) STR 0526 (Tribunal) - Approved [Para 31]
Commissioner v. Kamlesh Kumar Agrawal - 2006(02)LCX0183 Eq 2006 (004) STR 0205 (Tribunal) - Approved [Paras 26,28]
Commissioner v. Mankodi Enterprises - 2005(12)LCX0104 Eq 2006 (002) STR 0150 (Tribunal) - Overruled [Paras 29, 30, 31, 32, 36, 37, 38, 46]
Commissioner v. R.K. Electronic Cable Network - 2006(01)LCX0138 Eq 2006 (002) STR 0153 (Tribunal) - Approved [Para 28]
Commissioner v. R.S. Vora - CESTAT Order dated 27-6-2008 - Approved [Para 24]
Commissioner of Sales Tax, U.P., Lucknow v. Parson Tools and Plants - AIR 1975 SC 1039 - Noted [Para 13]
Jay Security Services v. Commissioner - 2008(02)LCX0031 Eq 2008 (010) STR 0602 (Tribunal) - Approved [Paras 29,30,32]
Laxmichand Dharshi v. Commissioner - 2006(10)LCX0114 Eq 2007 (005) STR 0128 (Tribunal) - Approved [Para 21]
Pankaj Oil Trading Corporation v. Commissioner - 2006(11)LCX0174 Eq 2007 (006) STR 0044 (Tribunal) - Overruled [Paras 29, 30, 31, 32, 36, 37, 38, 46]
Soldiers Industrial Security Agencies v. Commissioner - 2007(03)LCX0249 Eq 2007 (007) STR 0283 (Tribunal) - Approved [Para 29]
Tele Tech Communications v. Commissioner - 2007(06)LCX0076 Eq 2007 (007) STR 0695 (Tribunal) - Approved [Para 20]
Union of India v. Wood Papers Ltd. -1990(04)LCX0075 Eq 1990 (047) ELT 0500 (S.C.) - Noted [Para 16]
Departmental Clarification Quoted-
Ministry of Finance, D.O. Letter F.No. 137/39/2004-CX.4 dated 20-9-2004 [Paras 1,4,7,9,10,11,12,15,18,29,31,33,41, 43,46]
C.B.E. & C. Circular dated 23-9-2004 [Paras 27,30]
Advocated By -
S/Shri V.K. Mathur and Rishabh Sancheti, for the Appellant.
S/Shri Vikas Balia and Tribhuvan Gupta, for the Respondent.
[Judgment per : N.P. Gupta, J.]. -
All these five appeals involve common question of law, being as to whether the circular issued by the Central Board of Excise & Customs dated 20-9-2004, as referred to in the order under appeal, governs the case of the respondent?
2. Appeals no. 26/2007, 70/2006, 3/2007, and 74/2006 were admitted on different dates, by framing substantial question of law, may be differently worded but purportedly to cover this controversy. However, appeal No. 54/2007 was admitted on 23-10-2007, without framing any substantial question of law. However, in view of the above, the said question is hereby framed in this Appeal No. 54/2007 also.
3. The facts in all the five appeals are different, as they are different assessees, carrying on different types of business, did not get registration as required by the relevant chapter, introduced by the Finance Act, 1994, relating to imposition of Service Tax, hereafter referred to as the "Service Tax Act", arid notices were issued. Thereupon adjudication of liability of amount of tax and penalty was made. The matter was carried in appeal, and then the matter was finally carried to the Tribunal.
4. The learned Tribunal passed different orders, holding, that the Government of India Ministry of Finance, vide D.O. Letter dated 20-9-2004, framed an Amnesty Scheme, and according to that scheme, found the assessee to be entitled to the benefit of Scheme, and thus the penalty imposed was set aside. However, in some cases where the penalty to the extent of 25%, which was deposited by the assessee, was maintained, and rest was set aside. The same learned Member passed this type of orders in the matters arising out of Appeal No. 26/2007, 70/2006, and 3/2007, while another Member Shri C.N.B. Nair found the case to be covered by earlier judgment of the Tribunal, being C.C.E. Bhopal v. Bharat Security Services & Worker's Contractor reported in 2005 (188) ELT 454 = 2005(06)LCX0114 Eq 2006 (003) STR 0703 (T). Likewise, in the judgment forming subject matter of subsequent Appeal No. 54, the same learned Member, who passed the orders in appeal forming subject matter of Appeal Nos. 3, 70 and 26, passed the impugned order to the same effect, following the judgment in Bharat Security Services & Worker's case, and another judgment in Amit Kumar Maheshwari v. CCE reported in 2006 (002) STR 506.
5. Thus, in substance, the controversy is, as to whether the assessee is entitled to the benefit of Amnesty Scheme, or not?
6. The necessary facts in this regard are, that admittedly none of these assessees got themselves registered after promulgation of Amnesty Scheme, and during its subsistence, rather they were already registered, and the liability of tax, in some cases related to the period anterior to the registration, while in some cases it relates to the period subsequent to the registration, and its non-payment of tax timely has attracted penalties as above. It is also not in dispute, that in all matters, the requisite tax, interest etc. had already been paid, before expiry of the period provided in the aforesaid Amnesty Scheme, being 30th October, 2004.
7. We may gainfully reproduce the so called scheme. It may be observed, that the papers made available to us show, that as such there is no scheme, rather it is only a communication in the form of D.O. letter, from the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, addressed to the Chief Commissioners, and encloses therewith certain proformas of application for registration, acknowledgment, and declaration. However, the benefits flow from the contents of the communication itself, and therefore, we may gainfully quote the communication dt. 20-9-2004, which reads as under :-
"D.O.F. No. 137/39/2004-CX.4 20th September 2004
My Dear Chief Commissioner,
Subject: Extra-ordinary taxpayer friendly scheme for instant registration of service providers.
Hon'ble Finance Minister has launched an extra-ordinary taxpayer friendly Scheme for registration of those service providers who have not got themselves registered so far. The details of the scheme are enclosed as annexure. This scheme aims to register all service providers on the basis of their declaration and who had earlier failed to register themselves with the department due to ignorance or any other reason with full waiver of penalty. This scheme is effective with immediate effect.
As per the scheme any service provider can make a declaration to the department with regards to his past liabilities towards the service tax and interest payable. Without any inquiry or questions, the departmental authorities will accept the declaration and on the spot give a registration to the service provider. Penal proceedings against the person approaching under this scheme will be completely waived off.
This scheme commences with immediate effect and will be operational only up-to 30th October 2004 and no extension will be allowed. You should publicise the scheme and organize sufficient numbers of camps to facilitate the service providers who wish to avail of the relaxations given under the scheme through out your jurisdiction. You should instruct your officers to be courteous and polite, they should not put any uncomfortable questions to the persons opting for the scheme.
You should mobilize all the resources available with you in a judicious manner, so that enough number of officers is available for implementing the scheme.
Since the scheme has been launched at the instance of Finance Minister you should give a very wide publicity in print media to the scheme in your areas through Banners, hoardings, press releases etc. Hon'ble Finance Minister has also sanctioned a sum of Rs. 20 lakhs for each zone to undertake the publicity work in relation to Service Tax. Since ministry has taken considerable pains in framing the scheme and also provided funds at your disposal to make the scheme a success, it expects excellent results from you and your officers. Gear up your machinery and make the scheme a success. Any failure in implementing the scheme at any level will be viewed very seriously.
With best wishes,
Yours sincerely
Sd/-
(S. Chandra)
Encl: as above
All Chief Commissioners of Central Excise.
OFFICE OF THE CHIEF COMMISSIONER (JZ) CENTRAL EXCISE
(JAIPUR' ZONE), JAIPUR
C.NO. CCO (JZ) ST/38/2004 DATE : 20-9-2004
Copy Forwarded to the Commissioner, Central Excise, Jaipur-I and Jaipur-II for information and necessary action.
Sd/-
Deputy Commissioner (CCO)
Speed Post
Central Excise Commissioner, Jaipur-II
C.No. V (ST)30/37/JP-II/04/2119-23 Dt. 21-9-04
Copy forwarded to the Deputy Comm/Asstt. Comm. C. Ex. Div. Ajmer, Bhilwara, Chittorgarh, Jodhpur & Udaipur for information with regards to send weekly report for every Monday positively.
Sd/-
21/9/04
Asstt. Comm. (ST)
**************
137/39/2004-CX.4
Annexure
Form of Declaration
To,
The Designated Authority:
Sir,
I hereby make the declaration for being registered in terms of Section 69 of the Finance Act, 1994 (32 of 1994).
1. Name : ……………………………
2. Address of the business premises : …………………
3. Date of Commencement of Business: ……………………….
4. Taxable Services : ……………………………….
5. Date from which service tax is payable: ………………………
Turnover of the services since the date when service tax became payable :
Financial Year Turnover of taxable services rendered Service Tax payable Interest payable, if any
6. The declaration with regards to the Service tax and interest payable given above is correct and true to the best of my knowledge.
7. Along with this declaration I am enclosing the details in Form ST 1 for being registered with Service tax department.
8. Signature : ………………………………
9. Place : …………………………………..
10. Date : ………………………………..
Notes :
(a) The service tax is payable @ 5% upto 14th May 2003, 8% for period between 14th May 2003 and 10th September 2004 and 10% for period after 10th September 2004.
(b) For period after 10th September 2004, education cess @ 2% of Service Tax payable is also to be paid.
(c) Interest is payable @ 24% upto 11th May 2002, 15% for period between 11th May 2002 and 10th September 2004 and 18% for period after 10th September 2004.
(d) In case where services have become taxable from date in middle of Financial Year indicate turnover from that date.
________________________________________
________________________________________
Acknowledgement
To,
____________
____________
____________
Sir,
Your declaration dated has been received. Your registration number in form ST2 is enclosed.
You should deposit the amount of Service Tax and interest as indicated by above within seven days and report compliance.
Encl: Form ST-2
Signature of the Officer receiving the declaration
Place :
Date:
*****************
FORM ST-1
Application for registration under section 60 of the Finance Act 1994 (32 of 1994)
1. Name of the assessee :
2. Address of the assessee :
2A. PAN Number :
3. Address of the premises to be registered :
4. Category of the service :
5. Tax/telex and phone number :
6. Form of organization (individual/company/partnership, etc.) :
7. Additional Information required in the case of stock-broker :
(a) Name of the member, with code No. :
(b) Name of stock exchange registered with :
(c) Date of admission of membership :
(d) Whether member of more than one stock exchange. If so, please give name of the stock exchange with code numbers :
(e) Registration number allotted by securities and Exchange Board of India (copy of certificate) registration may be en¬closed or a copy of application for registration with SEBI may be enclosed :
8. I/We ______________ agree to abide by all the provisions of Service Tax Rules, 1994 and any order issued thereunder.
9. I/We ___________ declare to the best of my/our knowledge and belief that the information furnished herewith is true and com¬plete.
Place :
Date:
Signature of assessee or his authorised representative.
*****************
F.No. 137/39/2004-CX.4
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
New Delhi, the 22nd September, 2004
To
All Chief Commissioners of Central Excise.
Subject: Extraordinary taxpayer friendly scheme for registration of service providers.
I am directed to refer to the D.O. of even number dated 20th September, 2004 on the above mentioned subject. D.G.(ST) has pointed out some error in the annexed "declaration form". The revised declaration forms are enclosed herewith for necessary action at your end.
Yours faithfully
Sd/-
(Sanjiv Srivastava)
Deputy Secretary (CX.4)
Encls : As above
Office of the Chief Commissioners
Central Excise (JZ) Jaipur
CN CCO(JZ) ST/38/2004 3701 Date : 23-9-2004
Copy forwarded to the Commissioner Central Excise, Jaipur-I and Jaipur-II in continuation to this office endorsement of even No. NIL dated 20-9-2004 for information and necessary action please.
Sd/-
Deputy Commissioner (CCO)
Central Excise Commissionerate, Jaipur-II
C.No. V(ST) 30/37/JP-II/04 Dated: 24-9-04
Copy forwarded to the Deputy/Asstt. Commissioner, Central Excise Division, Ajmer/Bhilwara/Chittorgarh/Jodhpur/Udaipur for information & necessary action.
Sd/
24-9-04
Asstt. Commmr.(ST)
*****************
Annexure
Form of Declaration
To,
The Designated Authority :
__________________
Sir,
I hereby make the declaration for being registered in terms of Section 69 of the Finance Act, 1994 (32 of 1994).
1. Name :
2. Address of the business premises :
3. Date of Commencement of Business :
4. Taxable Services :
5. Date from which service tax is payable :
Turnover of the services since the date when service tax became payable :
Financial Year Turn over of taxable services rendered Service Tax payable Interest payable, if any
6. The declaration with regards to the Service tax and interest payable given above is correct and true to the best of my knowledge.
7. Along-with this declaration I am enclosing the details in form ST 1 for being registered with Service Tax department.
8. Signature : _____________________________
9. Place : ______________
10. Date : ____________________________
Notes:
(a) The service tax is payable @ 5% up to 14th May 2003, 8% for period from 14th May 2003 and upto 9th September 2004 and 10% from 10th September 2004.
(b) For period from 10th September 2004, education cess @ 2% of Service Tax payable is also to be paid.
(c) Interest is payable @ 24% up to 11th May 2002,15% for period from 11th May 2002 and up-to 9th September 2004 and 13% from 10th September 2004.
(d) In case were services have become taxable from date in middle of Financial Year indicate turnover from that date.
Acknowledgement
To,
Sir,
Your declaration dated _________ has been received. Your registration number in form ST2 is enclosed.
You should deposit the amount of Service Tax and interest as indicated by above within seven days and report compliance.
Encl: Form ST-2
Signature of the Officer receiving the declaration
Place :
Date :
****************
8. Firstly the question is, as to whether this scheme has a statutory force, so as to term it as a taxing statute. Learned counsel for the Revenue drew our attention to the provisions of Section 83 of the Service Tax Act, whereby provisions of Section 37B of the Central Excise Act, 1944 have been made applicable, and contended, that this circular has been issued in accordance with Section 37B of the Central Excise Act. Section 37B of the Central Excise Act reads as under :-
"37B. Instructions to Central Excise Officers. - The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purposes of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this act shall observe and follow such orders, instructions and directions of the said Board :
Provided that no such orders, instructions or directions shall be issued -
(a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or
(b) so as to interfere with the discretion of the Commissioner of Central Excise (Appeals), in the exercise of his appellate functions."
9. If the aforesaid scheme, or the communication dated 20-9-2004 is read in conjunction with Section 37B, it is clear that it is not covered by Section 37B. The communication emanates from the Hon'ble Finance Minister, who has launched extraordinary taxpayer friendly scheme, while Section 37B does not envisage in launching of any such scheme, rather it comprehends powers of the Board (Central Board of Excise and Customs) wherever it considers it necessary or expedient so to do, for the purposes of uniformity in the classification of excisable goods, or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions. In addressing communication dated 20-9-2004 the Central Excise Board has not even purported to consider any expediency or necessity, for the purpose of uniformity with respect to levy of duties of excise on such goods, to issue such orders, instructions and directions. Simply because the desire of the Hon'ble Finance Minister is published through conduit pipe of the Central Excise Board, it does not have the effect of clothing it with statutory powers, or to attach to it statutory efficacy available consequent upon Section 37 and Section 37B. Thus, in our view, it cannot be said to be statutory notification, issued in exercise of powers under Section 37B.
10. Then, the question is, as to what is the nature of this communication, and the obvious answer is, that it is only an administrative instruction, issued by the Hon'ble Finance Minister, purportedly, to provide benefit to the persons, who earlier failed to register themselves with the department, and in substance is intended to cast the net of service tax wider and wider, and in order to augment the revenue the concessions provided in the communication were sought to be thrown open. Obviously, therefore, the communication has to be read, interpreted, understood, and appreciated, with this spirit, viz. to provide benefit to the defaulters on the one hand, and to cast the net of service tax wider and wider, so also to augment the revenue, on the other hand.
11. With this preface, it may also be noticed, that the term "Scheme" as such has very many parameters to be complied with, while in the present case the communication simply conveys launching of some extra-ordinary tax-payer friendly scheme, and no such scheme has seen the light of the day, except this communication, which only encloses therewith certain proformas. As such it cannot be said to be any "Scheme", in true sense of the term.
12. With this background it may be noticed here, that this communication dated 20-9-2004 had been subject matter of adjudication by various Tribunals, in umpteen number of cases. Before going through those cases, we think it appropriate to first deal with the cases cited by the learned counsel for the Revenue, basically about principles of interpretation.
13. The first judgment cited is the case of The Commissioner of Sales Tax, U.P., Lucknow v. Parson Tools and Plants, Kanpur reported in AIR 1975 SC 1039, and learned counsel referred to para 22 onwards. In this case, the question was, that an appeal was filed before the Dy. Commissioner which was dismissed in default. Then application for restoration thereof was filed, which remained pending for quite some time. In the meantime, the provision authorising dismissal of appeal in default was struck down. Obviously therefore, the original dismissal was treated to be dismissal on merits, and then against that order, revision was filed. Limitation for revision was one year, which, on showing sufficient cause, could be extended for another six months, while the revision was filed after more than 18 months, and the period of time spent in prosecuting the restoration application was sought to be excluded under Section 14 of the Limitation Act, or on its analogy. In that fact situation, the Hon'ble Supreme Court, by referring to various previous judgments of Privy Council etc., based on Section 37(5) of the Arbitration Act, held, that where upper time limit has been prescribed, and sufficient cause is shown, delay can be condoned, in the maximum, only up to a specified time limit, and the analogy of Section 14(2) cannot be imported, apart from the fact, that Section 14, as such, is not applicable, as the authorities under the taxation statutes are not courts, but are administrative authorities. In our view, on principle there is no dispute about this legal proposition.
14. The next case relied upon is, in Bharti Telecom Ltd. v. The Commissioner of Customs, reported in 2001(11)LCX0012 Eq 2001 (134) ELT 0327 (S.C.) = AIR 2002 SC 74. In this case, there was an amnesty scheme, wherein where the assessee had wrongly availed the credit of MODVAT on inputs, and availed the duty free clearance of the goods, claiming exemption under Notification No. 203/92, under the Value Based Advance Licence, in cases, where the assessee was not entitled to avail MODVAT credit, he was required to reverse it, and to pay interest, and other consequences were to flow, for that, an amnesty scheme was floated, requiring interest to be deposited for the period between the date of export and date of reversal, which interest was required to be deposited by 31-1-1997. In that case, the amount was deposited on 7-2-1997 only. In that background, interpreting the scheme, it was held, that such scheme or exemption notification have to be strictly construed, and that the provision in the notification, for deposit of interest by the specified date, has to be interpreted strictly, in the manner stated in the notification, and on no other basis. It was held, that it is well settled, that in taxing statute there is no room for any intendment, and regard must be had to the clear meaning of the words, and that, the matter should be governed only by the language of the notification.
15. In our view, so far as the provision of deposit, under the communication dt. 20-9-2004 is concerned, being 30-10-2004, there is no dispute, that it is required to be strictly construed, and in all the cases in hand, admittedly, the amount has been deposited before the said date, as obviously if the amount had not been deposited, the assessee would not have been entitled to any benefit of this communication. There is also no dispute about the proposition, that in taxing statute there is no room for any intendment, and regard must be had to the clear meaning of the words, and that the matter should be governed only by the language of the notification. The difficulty is, that this communication dt. 20-9-2004 is neither notification, nor a taxing statute, rather as held above, it is only an administrative instruction, granting benefits and reliefs, in an attempt to cast service tax net wider and wider, and to augment the revenue.
16. The next judgment relied upon is, in Union of India & Ors. v. Wood Papers Ltd. reported in 1990 (047) ELT 500. (S.C.) = (1990) 4 SCC 256. In this case also, it has been held, that exemption notification has to be read as a whole, and is required to be considered as a whole. There is no dispute about the legal proposition propounded therein.
17. The next case relied upon is in CIT, Delhi v. Modi Spinning and Weaving Mills Co. Ltd., reported in 1992 Suppl (1) SCC 32. This judgment in our view, is a judgment on its own facts, and is of no assistance to either side.
18. Now we take up the cases cited on either side, which have considered this communication dt. 20-9-2004. Of course, we have not been made available the copy of judgment in Amit Kumar Maheshwari's case. However, the learned counsel for the assessee first relied upon the judgment in C.C.E., Bhopal v. Bharat Security Services & Worker reported in 2005(06)LCX0114 Eq 2006 (003) STR 0703 (T) = 2005 (188) ELT 454. This is a judgment rendered by Shri S.S. Kang, the learned Single Member (Vice-President of the Principal Bench, New Delhi) and in that case, the orders in appeal had set aside the penalties imposed on assessee, as the assessee had paid service tax along with interest prior to 20-9-2004, by holding that Extraordinary Tax Payer Friendly Scheme was circulated vide letter dt. 23-9-2004, whereunder any service provider, who got registered up to 30-10-2004, are not liable for any penal action and thus, in view of the immunity from penal action, no penalty could be imposed on the assessee, as they had paid service tax prior to 30-10-2004. A contention was raised therein, that the assessee was already registered prior to the floating of the scheme and, therefore, are not entitled to benefit of scheme, and it was held, that the service provider who got registered, and paid service tax, during Extra-ordinary Tax Payer Friendly Scheme up to 30-10-2004, are not liable to pay any penalty, therefore, no infirmity was found in the order of the Commissioner, as the assessee had paid service tax prior to 30-10-2004, they are not liable to any penalty. This judgment is dated 13-6-2005 (28-4-2005).
19. Then the learned counsel placed reliance on a judgment rendered by a learned Single Member M.V. Ravindran dt. 5-12-2006, rendered in Appeal No. 312/2006, which has been passed, following the judgment in Amit Kumar v. CCE, Jaipur-II, reported in 2006 (002) STR 506, and C.C.E., Bhopal v. Bharat Security Services & Worker's case. It would suffice to say, that Appeal No. 54/2007 in this bunch is filed against this very judgment dt. 5-12-2006.
20. The next judgment relied upon is Tele Tech Communication v. Commissioner of C. Ex. dt. 4-6-2007 [2007(06)LCX0076 Eq 2007 (007) STR 0695 (T)], rendered by learned Single Member, Shri C.N.B. Nair, reported in MANU/CE/8215/2007. In that case, the Tribunal had found, that the scheme makes it clear, that service providers were welcome to avail of the scheme, irrespective of whether proceedings have been initiated or not. In that view of the matter, the assessee was held entitled to the benefit of exemption from penalty. In that case, the assessee had applied for registration only after being served with a notice.
21. Then the next case relied upon is the order of the Tribunal West Zonal Bench, Mumbai dt. 17-10-2006 in Laxmichand Dharshi v. Commissioner of C. Ex., rendered by the learned Single Member Shri K.K. Agarwal, reported in 2006(10)LCX0114 Eq 2007 (005) STR 0128 (T) = MANU/CM/7027/2006. In that case also, the facts were, that the assessee did not pay tax, nor did file return, for the period 1-10-2002 to 30-4-2003, and deposited the tax and interest on 10-2-2004. Penalty was defended on the ground of delay being unintentional. However, when the matter went to the Tribunal, relying on the judgment in Bharat Security Services & Worker's case, it was held, that there has been a delay on the part of the assessee in paying the service tax. However, taking into consideration the Tax Payer Friendly Scheme, introduced by the Government, and the Tribunal decision in the case of Bharat Security Services & Worker's case, the penalties were set aside.
22. The next judgment relied upon is again of Tribunal West Zonal Bench, Mumbai dt. 4-9-2006 rendered by the learned Member, Archana Wadhwa in A.R. Sandeep C. Sikchi v. Commissioner of Central Excise, reported in 2006(09)LCX0148 Eq 2006 (004) STR 0587 (T) = MANU/CM/0353/2006. In this case also, the amount of service tax for the period October 1998 to March 2003 stood paid on 26-7-2003, show cause notice was issued for penalty on 6-12-2004, which was dropped. In appeal the Commissioner imposed the penalty, and the Tribunal in further appeal, relying upon the judgment in Bharat Security Services & Worker's case held, that the assessee had admittedly paid the tax, and had themselves got registered prior to 31-10-2004, there is no justification for enhancement of penalty imposed on the assessee. Thus the penalty was set aside.
23. The next case relied is again of Tribunal West Zonal Bench, Mumbai dt. 28-5-2007, in Arc. Dinesh Burad v. Commissioner of Central Excise and Customs, rendered by learned Member, M.V. Ravindran reported in 2007(05)LCX0407 Eq 2008 (011) STR 0250 (T) = (2008) 12 STT 47. In this case, the assessee failed to pay service tax from October 2001 to March 2003, and had paid the entire amount of service tax by 1-3- 2004. The adjudicating authority imposed penalty of Rs. 500/-, the Commissioner enhanced the penalty. In further appeal to the Tribunal, the Tribunal found, that the Central Government of India came out with the Extraordinary Tax Payer Friendly Scheme, for those persons who were not registered and were not paying service tax. The said scheme operated on the basis, that any person who has not registered but gets himself registered and discharged service tax liability and interest before 30-10-2004, no penal provision could be invoked against such assessee. Then also proceeded to rely upon Bharat Security Services & Worker's case, and penalty was set aside.
24. The next case relied upon is again of Tribunal West Zonal Bench, Mumbai dt. 27-6-2008, rendered by the same learned Member, in Commissioner of Central Excise v. R.S. Vora, reported in MANU/CM/0334/2008, where again relying upon the judgment in Bharat Security Services & Worker's case, the revenue's appeal was dismissed.
25. The next case relied upon is of Tribunal West Regional Bench, Ahmedabad dt. 23-3-2007, in Care Electronics Ltd. v. Commissioner of C. Ex., rendered by the learned Member, Archana Wadhwa, reported in 2007 (007) STR 273. In this case, the tax for the period 1-7-2003 to 30-4-2004 was not paid. However, on detection by Revenue the same was deposited on 6-8-2004, along with interest, and the learned Tribunal, relying on the judgment in Bharat Security Services & Worker's case held, that no penalty is imposable on the assessee, and the penalty was set aside.
26. The next judgment relied upon is of Principal Bench Delhi dt. 14-2-2006, in CCE v. Shri Kamlesh Kumar Agarwal, Prop, of Mamta Travels, reported in 2006 (004) STR 205, rendered by the learned Member, Shri M.V. Ravindran. In this case, the Commissioner had set aside the penalty by holding as under :-
"As regards the imposition of various penalties under the different Sections quoted above for violation of the relevant provisions, I find that there are catena of decisions of various appellate for a to the effect that in the initial stages of introduction of this public oriented wide spread new levy, many of new assessees being ignorant, such procedural delays in taking up of registration and consequent filing of the returns etc. a lenient view can be taken. This was precisely the reason as to why many new Voluntary Disclosure schemes for voluntary compliance like Extra Ordinary Tax Payer Friendly Scheme declared under Board's F.No. 137/39/2004-Cx.4 dated 23-9-04 to be operational upto 30-10-04 in respect of the assessees who had not at all. complied with the provisions of Service Tax Law had been launched waiving the various penalties under the aforesaid Sections 75A, 76 & 77 etc. When the assessees who did not at all comply with the ST. Law can be given immunity provided they pay the Service Tax along with appropriate rate of interest, there is no tangible and logical reason as to why the law abiding assessee who had got himself registered more or less in time and had also started paying the Service tax along with interest, much before the new scheme became operational, should be denied the benefit of waiver of the penal provisions referred to above for late registration, delay in filing of relevant returns etc. all of which are procedural in nature. In view of my aforesaid findings, I am inclined to waive the penalties imposed on the said party."
27. And thus the finding was upheld by the learned Tribunal, in view of the aforesaid circular dt. 23-9-2004.
28. Then the next judgment relied upon is dt. 18-1-2006, of the Principal Bench, New Delhi rendered by the same learned Member, M.V. Ravindran in Commissioner of C. Ex. v. R.K. Electronics Cable Network reported in 2006 (002) STR 153, wherein also the Commissioner had practically recorded identical finding, as recorded in Kamlesh Kumar's case, and learned Tribunal relying upon the judgment in Bharat Security Services & Worker's case upheld that order.
29. The last case relied upon is judgment dt. 29-2-2008, rendered by West Zonal Bench at Ahmedabad, in jay Security Services v. Commissioner of Customs, C. Ex. and Service Tax, reported in 2008 (010) STR 602, rendered by the learned Member Archana Wadhwa. In that case, the period involved was April 1999 to March 2004. The assessee was registered with the department on 29-9-2003, and the penalty was defended on the ground, that assessee was not aware of the leviability of service tax upon him. Then in appeal reliance was placed on scheme floated by communication dt. 20-9-2004, and contended, that admittedly, assessee has paid tax before 30-10-2004, while the counsel for the Revenue argued, that the assessee was registered with effect from 29-9-2003, and as such the provisions of this scheme would not apply, and reliance was placed on CCE. Bhopal v. Mankodi Enterprises, reported in 2006 (002) STR 150, and Pankaj Oil Trading Corporation v. CCE, Ahmedabad, reported in 2007 (006) STR 44, and the learned Tribunal found, that both these cases related to payment of service tax after registration, whereas in the present case, the dispute is, as regards the service tax prior to the period of registration. As such, the ratio of the law as declared in both the cases is not applicable. Then relying upon Bharat Security Services & Worker's case, it was held, that assessee is entitled to the benefit of the said scheme, if the service tax for the past period stands paid by him by 30-10-2004. It was also noticed, that Bharat Security Services & Worker's case has been followed by the Tribunal in the case of Soldiers Indus. Security Agencies v. CCE, Nasik, reported in 2007 (007) STR 283.
30. Now we may refer to the two judgments, in Mankodi Enterprises' case and Pankaj Oil Trading Corporation's case, which have been relied upon by the learned counsel for the Revenue, and as noticed, had been cited on behalf of Revenue in Jai Securities Services' case. In Mankodi Enterprises' case the assessee was liable to pay tax from 1-9-1999 onwards. The assessee took registration of service tax in October 2003, show cause notice was issued demanding service tax and penalty, which was adjudicated by the Dy. Commissioner, Central Excise, who demanded service tax and imposed various penalties, the levy of service tax was upheld, but the penalties imposed under Section 75A, 76, 77 and 78 were dropped, on the ground of circular dt. 23-9-2004. It was argued by the Revenue, that the assessee was required to take out service tax registration from 1999, and was required to file service tax return, and pay the service tax regularly, but the assessee has not paid tax till October 2003, and when the department asked the assessee to pay tax, then they took registration and paid service tax, and submitted the return in October 2003, and that the tax was paid by them only after adjudication of the proceedings, therefore, they are not covered by the voluntary disclosure scheme. On the other hand, reliance was placed on the said circular. The learned Tribunal noticed, that the Commissioner had dropped the penalty, on the ground, that under the said circular, when the assessee, who did not at all comply with the service tax law, can be given immunity, provided they pay service tax with appropriate rate of interest, and there is no tangible and logical reason as to why the law abiding assessee, who had got himself registered more or less in time, and had also started paying the service tax in time, much before the new scheme became operational, should be denied the benefit of waiver of penalty. The learned Tribunal found, that the circular was only with respect to those service providers, who had earlier failed to register themselves due to ignorance or for any other reason, and who came forward and paid the past liability within the period prescribed under this circular. It was found, that this circular was not applicable for those persons, who had already taken registration, or were paying service tax. Thus, the order waiving penalty, on the basis of circular was set aside. It is a different story, that ultimately in the order, the learned Tribunal modified the penalty, and reduced to a total amount of Rs. 17,500/-.
31. Then in Pankaj Oil Trading Corporation's case, which is a judgment dt. 20-11-2006, did consider the judgment in Bharat Security Services & Worker's case, and Mankodi Enterprises' case as well. In that case the assessee had received commission for the period from 1-9-2000 to 31-6-2001 and 1-7-2001 to 31-12-2001, and was liable to pay service tax, and even after obtaining registration, service tax was not paid in its entirety, and did not file any service tax return. The Assistant Commissioner found, that the assessee failed to disclose the value of taxable service, and suppressed it, and thereby evaded the service tax, by not filing the returns. Then, the tax liability, after adjusting the amount already paid, was adjudicated, and penalty was imposed. The Appellate Commissioner reduced the penalties. Then, before the learned Tribunal, the assessee relied upon the Amnesty scheme, and also relied upon the judgment of learned Single Member Bench, in CCE, Bhopal v. Industrial Army reported in 2006 (003) STR 526, where the penalties were set aside, on the ground that "there was no tangible and logical reason as to why the law abiding assessee who had got himself registered more or less in time and had also started paving the service tax along with interest, much before the new scheme became operational, should be denied the benefit of waiver of the penal provisions referred to above for late registration". Likewise the judgment in Amit Kumar Maheshwari's case and Bharat Security Services & Worker's case were also relied upon, while the Revenue relied upon the judgment in Mankodi Enterprises, and the learned Tribunal, in that case, in para-7 found, that the scheme was only in respect of service provider, who had earlier failed to get themselves registered, due to ignorance, or for any other reason, and who came forward and paid past liability within the prescribed period in the circular. Therefore, it was not found to be applicable to the persons who have already taken registration, or were paying service tax. It was also found, that it is evident from the wordings of the scheme, as announced under the circular dt. 20-9-2004, that it was intended only for instant registration of service providers, who could make declaration to the department, with regard to past liabilities towards the service tax and interest payable. Then, the case was considered on merits, and the liability was upheld.
32. At this place we may observe, that these two cases in Mankodi Enterprises and Pankaj Oil Trading Corporation are not the cases regarding the payment of service tax after registration, as assumed by the learned Member in Jay Security Services' case, for distinguishing these two judgments. Be that as it may. The fact also does remain, that in Jay Security's case, the amount did involve the amount for the period, which included the period after registration, inasmuch as the period involved was April, 1999 to March, 2004, while the assessee was registered on 29-9-2003. Thus, in a way the judgment in jay Security Services' case is required to be considered to take a view, that even in cases where the amount relates to period prior to registration or subsequent to registration, the scheme does apply.
33. These are the only cases brought to our notice on either side. We make it clear that, no judgment of any High Court, or the Hon'ble Supreme Court, has been cited on either side, which may have taken into consideration the Amnesty Scheme, circulated vide this communication dt. 20-9-2004.
34. In our view, thus, the majority of the judgments do take the view, that the benefit of the scheme is available to the assessees, who were already registered though belatedly, and had deposited the entire amount of tax and interest, before the cut off date, prescribed in the scheme being 30-10-2004.
35. We feel constrained to consider the norms of judicial propriety, repeatedly laid down by the Hon'ble Supreme Court, in the matter of taking different views by the coordinate Benches, and the requirement of referring the matter to the Larger Bench, if a different view is sought to be taken.
36. If all the judgments mentioned above are considered on that basis, it is clear, that all the judgments have been rendered by the different learned Single Member of the different Benches, and so far Principal Bench of New Delhi is concerned, there also a view, different from the view taken in Mankodi Enterprises and Pankaj Oil Trading Corporation's cases has been taken.
37. Significantly the first judgment is in Bharat Security Services & Worker's case, which is rendered by the Principal Bench at Delhi, and is judgment dt. 13-6-2005, while the judgment in Mankodi Enterprises's case is also of the Principal Bench, New Delhi dt. 6-12-2005, and does not take notice of the judgment rendered by the learned Vice-President on 13-6-2005 in Bharat Security Services & Worker's case. Then, all other judgments cited on behalf of the assessee are subsequent judgments. Pankaj Oil Trading Corporation's case of course does consider the previous judgments, but then, the learned Member has taken upon himself the task of taking a different view, without adhering to the requirement of judicial propriety, of referring the matter to Larger Bench.
38. This leaves us to consider, as to whether we should countenance the view taken in Pankaj Oil Trading Corporation's case and Mankodi Enterprises's case, or the view taken in all other cases. This is one aspect of the matter.
39. The other equally important aspect of the matter is, that admittedly, the Revenue, in all, or even in any of the matters, which judgments have been referred to and relied upon by the learned counsel for the assessee, except that Bohra Pratisthan's case [2006(12)LCX0267 Eq 2007 (008) STR 0278 (Tribunal)], which under appeal before this Court, has not challenged further. We are aware of the judgment of the Hon'ble Supreme Court in C.K. Gangadharan's case [2008(07)LCX0024 Eq 2008 (228) ELT 0497 (S.C.)], which has also been relied upon by the learned counsel for the Revenue, but then, in that case the Hon'ble Supreme Court has held, that merely because in some cases the Revenue has not preferred appeal, that does not operate as a bar, for the Revenue to prefer an appeal in another case, where there is just cause for doing so, or it is in public interest to do so, or divergent views are expressed by the Tribunals or the High Courts.
(Emphasis supplied)
40. To say the least, the present situation, in view of the things discussed above, does not fall, within any of the exception laid down by the Hon'ble Supreme Court in para-13 of the judgment in C.K. Gangadharan's case, and therefore, it has to be taken into account, that it is the consistently established legal position, laid down by various Tribunals of the country, that in such cases, where the assessee is registered, even before the commencement of the Amnesty Scheme, and has paid all dues of tax and interest, before the cut-off date given in the scheme, being 30-10-2004, would be entitled to the benefit of the Amnesty Scheme. And therefore there is no occasion for this Court to unsettle the settled position, and now give rise to upheaval, to generate litigation, even in the matters, which stand closed. This is second aspect of the matter.
41. Still most important aspect of the matter is, that even if we were to consider the matter on merits, as held above, the communication dt. 20-9-2004 is only an administrative instruction, issued for the benefit of the service providers, who volunteered to get themselves registered, and discharged all their liabilities of tax and interest, up to the cut-off date, by providing immunity from penalty. This is beneficial part of the instruction for the service providers, while it is sought to be beneficial to the State, i.e. the Revenue, viz. it is intended to cast the net of the service tax wider and wider, and to augment the revenue. Thus, the instructions are calculated with the motive to benefit both sides, the service provider as well as the Revenue, and as such is not a taxing statute. Therefore, it is required to be implemented in the manner, which is not discriminatory, and which is reasonable, obviously to both the parties.
42. If considered from that stand point, we find ourselves to be leaning towards the interpretation, that when the person who has not got registered till issuance of the communication, if is intended to be given the benefit of immunity from penalty, the person who has already got himself registered, and is in the default of payment of interest or tax, cannot be denied the immunity from penalty, provided of course, he strictly complies with the requirement of the communication, with regard to deposit of the amount, positively before the cut-off date.
43. It is required to be grasped, that the communication is of 20-9-2004. In some judgments it has been referred to as 22-9-2004, while in some judgments it has been referred to as 23-9-2004. There may be a controversy, as to what is the starting point of the scheme, i.e. 20-9-2004 or 23-9-2004, or from the date the person concerned comes to know of it. The significance of this confusion is, that if the interpretation sought to be projected by the Revenue is taken, and if it is considered that the Scheme commenced on 23-9-2004, then even the person, who may have got himself registered on 21-9-2004, and happened to be defaulter, will have to be denied the benefit of immunity, or even the person who got himself registered on 22-9-2004, and is a defaulter will have to be denied the benefit of immunity, while on the other hand if it is taken to have commenced on 20-9-2004, then such person will get the benefit of immunity. Thus, the person even without knowing of the scheme, may have got himself registered on 21-9-2004, and would be in dilemma as to whether he is to get benefit of the immunity or not, such interpretation cannot be put on the Amnesty Scheme. Obviously the communication dt. 20-9-2004 does not prescribe the precise starting point of time of the scheme.
44. Carrying the things further logically, if the scheme is taken to have commenced on 20-9-2004, then if the benefit is available to the person who gets himself registered on 20-9-2004, despite being defaulter for any length of time, the benefit cannot be denied to a person who may be merely technically defaulter, and who in good sense, thought it proper to get himself registered on 19-9-2004 itself, and did not allow his default to continue for one more day. The interpretation sought to be projected by the Revenue, does not thus stand the scrutiny. On the other hand, a proper reading of the communication does only show, that it is intended to provide immunity to the defaulters, who choose to deposit the arrears of tax and interest by the cut-off date, and obviously, since for payment or deposit of the amount, the formalities of registration and declaration are necessary, the forms have been enclosed with the communication, and it has been directed, that the declaration would be accepted, and they would be given spot registration without any sort of questions. Much of the stress laid on the requirement of submitting declaration cannot be accepted, for the simple reason, that as observed above, the forms are prescribed under the relevant Rules of Service Tax itself; the Application Form being ST-1, Acknowledgment also forming part of the same form. So far declaration proforma is concerned, if it were to be read, would show, that it is only in the nature of forwarding letter of the application for registration, and nothing beyond that. Thus all that this so called scheme means is, that even if a person comes forward to apply for registration, and pays all arrears of tax and interest, before the cut-off date, he is conferred immunity from any sort of penalty. In that view of the matter, it cannot be said, that the immunity should be denied to the person who has already got himself registered.
45. Then, in the first para it is clearly mentioned that the scheme aims to register all service providers on the basis of declaration, and with this, with a conjunctive word "and who had earlier failed to register themselves". This "having earlier failed to register" cannot be confined to mean earlier to 20-9-2004, or 23-9-2004, but is required to mean, or construed to mean, "who failed to register at appropriate time as required by the Service Tax Act".
46. Thus, considering the matter from any aspect whatever, as discussed above, in our view, the view taken in Mankodi Enterprises, and Pankaj Oil Trading Corporation's case cannot be accepted, and the view taken in all other cases is required to be accepted. It is required to be held, that the benefit of the circular dt. 20-9-2004, does very much cover the case of the present assessees, as well.
47. The question as framed is accordingly answered against the Revenue, and in favour of the assessee. The appeals are dismissed. However, with the clarification, that if the amount of penalty to the extent of 25%, has been deposited by any of the assessees in these five appeals, then that amount of penalty need not be refunded to them.
Equivalent 2009 (233) ELT 0311 (Raj.)
Equivalent 2009 (013) STR 0119 (Raj.)
Equivalent 2009 (090) RLT 0761 (Raj.)
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
N.P. Gupta and Kishan Swaroop Chaudhari, JJ.
Union of India
Versus
Amit Kumar Maheshwari
Central Excise Appeal Nos. 74 and 70 of 2006, 3, 26 and 54 of 2007, decided on 8-12-2008
Cases Quoted -
Amit Kumar Maheshwari v. Commissioner - 2006(02)LCX0134 Eq 2006 (002) STR 0506 (Tribunal) - Approved [Paras 4,18,19,31)
Arc. Dinesh Burad v. Commissioner - 2007(05)LCX0407 Eq 2008 (011) STR 0250 (Tribunal) - Approved [Para 23]
A.R. Sandeep C. Sikchi v. Commissioner - 2006(09)LCX0148 Eq 2006 (004) STR 0587 (Tribunal) - Approved [Para 22]
Bharti Telecom Ltd. v. Commissioner - 2001(11)LCX0012 Eq 2001 (134) ELT 0327 (S.C.) - Noted [Para 14]
Bohra Pratisthan Pvt. Ltd. v. Commissioner - 2006(12)LCX0267 Eq 2007 (008) STR 0278 (Tribunal) - Approved [Para 39]
Care Electronics Ltd. v. Commissioner - 2007(03)LCX0246 Eq 2007 (007) STR 0273 (Tribunal) - Approved [Para 25]
CIT, Delhi v. Modi Spinning and Weaving Mills Co. Ltd. -1992 Suppl (1) SCC 32 - Distinguished [Para 17]
C.K. Gangadharan v. Commissioner - 2008(07)LCX0024 Eq 2008 (228) ELT 0497 (S.C.) - Noted [Paras 39,40]
Commissioner v. Bharat Security Services and Worker's Contractor - 2005(06)LCX0114 Eq 2005 (188) ELT 0454 (Tribunal) = 2005(06)LCX0114 Eq 2006 (003) STR 0703 (Tribunal) Approved [Paras 4,18,19, 21, 22, 23, 24, 25, 28, 29, 31, 37]
Commissioner v. Industrial Army - 2006(02)LCX0184 Eq 2006 (003) STR 0526 (Tribunal) - Approved [Para 31]
Commissioner v. Kamlesh Kumar Agrawal - 2006(02)LCX0183 Eq 2006 (004) STR 0205 (Tribunal) - Approved [Paras 26,28]
Commissioner v. Mankodi Enterprises - 2005(12)LCX0104 Eq 2006 (002) STR 0150 (Tribunal) - Overruled [Paras 29, 30, 31, 32, 36, 37, 38, 46]
Commissioner v. R.K. Electronic Cable Network - 2006(01)LCX0138 Eq 2006 (002) STR 0153 (Tribunal) - Approved [Para 28]
Commissioner v. R.S. Vora - CESTAT Order dated 27-6-2008 - Approved [Para 24]
Commissioner of Sales Tax, U.P., Lucknow v. Parson Tools and Plants - AIR 1975 SC 1039 - Noted [Para 13]
Jay Security Services v. Commissioner - 2008(02)LCX0031 Eq 2008 (010) STR 0602 (Tribunal) - Approved [Paras 29,30,32]
Laxmichand Dharshi v. Commissioner - 2006(10)LCX0114 Eq 2007 (005) STR 0128 (Tribunal) - Approved [Para 21]
Pankaj Oil Trading Corporation v. Commissioner - 2006(11)LCX0174 Eq 2007 (006) STR 0044 (Tribunal) - Overruled [Paras 29, 30, 31, 32, 36, 37, 38, 46]
Soldiers Industrial Security Agencies v. Commissioner - 2007(03)LCX0249 Eq 2007 (007) STR 0283 (Tribunal) - Approved [Para 29]
Tele Tech Communications v. Commissioner - 2007(06)LCX0076 Eq 2007 (007) STR 0695 (Tribunal) - Approved [Para 20]
Union of India v. Wood Papers Ltd. -1990(04)LCX0075 Eq 1990 (047) ELT 0500 (S.C.) - Noted [Para 16]
Departmental Clarification Quoted-
Ministry of Finance, D.O. Letter F.No. 137/39/2004-CX.4 dated 20-9-2004 [Paras 1,4,7,9,10,11,12,15,18,29,31,33,41, 43,46]
C.B.E. & C. Circular dated 23-9-2004 [Paras 27,30]
Advocated By -
S/Shri V.K. Mathur and Rishabh Sancheti, for the Appellant.
S/Shri Vikas Balia and Tribhuvan Gupta, for the Respondent.
[Judgment per : N.P. Gupta, J.]. -
All these five appeals involve common question of law, being as to whether the circular issued by the Central Board of Excise & Customs dated 20-9-2004, as referred to in the order under appeal, governs the case of the respondent?
2. Appeals no. 26/2007, 70/2006, 3/2007, and 74/2006 were admitted on different dates, by framing substantial question of law, may be differently worded but purportedly to cover this controversy. However, appeal No. 54/2007 was admitted on 23-10-2007, without framing any substantial question of law. However, in view of the above, the said question is hereby framed in this Appeal No. 54/2007 also.
3. The facts in all the five appeals are different, as they are different assessees, carrying on different types of business, did not get registration as required by the relevant chapter, introduced by the Finance Act, 1994, relating to imposition of Service Tax, hereafter referred to as the "Service Tax Act", arid notices were issued. Thereupon adjudication of liability of amount of tax and penalty was made. The matter was carried in appeal, and then the matter was finally carried to the Tribunal.
4. The learned Tribunal passed different orders, holding, that the Government of India Ministry of Finance, vide D.O. Letter dated 20-9-2004, framed an Amnesty Scheme, and according to that scheme, found the assessee to be entitled to the benefit of Scheme, and thus the penalty imposed was set aside. However, in some cases where the penalty to the extent of 25%, which was deposited by the assessee, was maintained, and rest was set aside. The same learned Member passed this type of orders in the matters arising out of Appeal No. 26/2007, 70/2006, and 3/2007, while another Member Shri C.N.B. Nair found the case to be covered by earlier judgment of the Tribunal, being C.C.E. Bhopal v. Bharat Security Services & Worker's Contractor reported in 2005 (188) ELT 454 = 2005(06)LCX0114 Eq 2006 (003) STR 0703 (T). Likewise, in the judgment forming subject matter of subsequent Appeal No. 54, the same learned Member, who passed the orders in appeal forming subject matter of Appeal Nos. 3, 70 and 26, passed the impugned order to the same effect, following the judgment in Bharat Security Services & Worker's case, and another judgment in Amit Kumar Maheshwari v. CCE reported in 2006 (002) STR 506.
5. Thus, in substance, the controversy is, as to whether the assessee is entitled to the benefit of Amnesty Scheme, or not?
6. The necessary facts in this regard are, that admittedly none of these assessees got themselves registered after promulgation of Amnesty Scheme, and during its subsistence, rather they were already registered, and the liability of tax, in some cases related to the period anterior to the registration, while in some cases it relates to the period subsequent to the registration, and its non-payment of tax timely has attracted penalties as above. It is also not in dispute, that in all matters, the requisite tax, interest etc. had already been paid, before expiry of the period provided in the aforesaid Amnesty Scheme, being 30th October, 2004.
7. We may gainfully reproduce the so called scheme. It may be observed, that the papers made available to us show, that as such there is no scheme, rather it is only a communication in the form of D.O. letter, from the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, addressed to the Chief Commissioners, and encloses therewith certain proformas of application for registration, acknowledgment, and declaration. However, the benefits flow from the contents of the communication itself, and therefore, we may gainfully quote the communication dt. 20-9-2004, which reads as under :-
"D.O.F. No. 137/39/2004-CX.4 20th September 2004
My Dear Chief Commissioner,
Subject: Extra-ordinary taxpayer friendly scheme for instant registration of service providers.
Hon'ble Finance Minister has launched an extra-ordinary taxpayer friendly Scheme for registration of those service providers who have not got themselves registered so far. The details of the scheme are enclosed as annexure. This scheme aims to register all service providers on the basis of their declaration and who had earlier failed to register themselves with the department due to ignorance or any other reason with full waiver of penalty. This scheme is effective with immediate effect.
As per the scheme any service provider can make a declaration to the department with regards to his past liabilities towards the service tax and interest payable. Without any inquiry or questions, the departmental authorities will accept the declaration and on the spot give a registration to the service provider. Penal proceedings against the person approaching under this scheme will be completely waived off.
This scheme commences with immediate effect and will be operational only up-to 30th October 2004 and no extension will be allowed. You should publicise the scheme and organize sufficient numbers of camps to facilitate the service providers who wish to avail of the relaxations given under the scheme through out your jurisdiction. You should instruct your officers to be courteous and polite, they should not put any uncomfortable questions to the persons opting for the scheme.
You should mobilize all the resources available with you in a judicious manner, so that enough number of officers is available for implementing the scheme.
Since the scheme has been launched at the instance of Finance Minister you should give a very wide publicity in print media to the scheme in your areas through Banners, hoardings, press releases etc. Hon'ble Finance Minister has also sanctioned a sum of Rs. 20 lakhs for each zone to undertake the publicity work in relation to Service Tax. Since ministry has taken considerable pains in framing the scheme and also provided funds at your disposal to make the scheme a success, it expects excellent results from you and your officers. Gear up your machinery and make the scheme a success. Any failure in implementing the scheme at any level will be viewed very seriously.
With best wishes,
Yours sincerely
Sd/-
(S. Chandra)
Encl: as above
All Chief Commissioners of Central Excise.
OFFICE OF THE CHIEF COMMISSIONER (JZ) CENTRAL EXCISE
(JAIPUR' ZONE), JAIPUR
C.NO. CCO (JZ) ST/38/2004 DATE : 20-9-2004
Copy Forwarded to the Commissioner, Central Excise, Jaipur-I and Jaipur-II for information and necessary action.
Sd/-
Deputy Commissioner (CCO)
Speed Post
Central Excise Commissioner, Jaipur-II
C.No. V (ST)30/37/JP-II/04/2119-23 Dt. 21-9-04
Copy forwarded to the Deputy Comm/Asstt. Comm. C. Ex. Div. Ajmer, Bhilwara, Chittorgarh, Jodhpur & Udaipur for information with regards to send weekly report for every Monday positively.
Sd/-
21/9/04
Asstt. Comm. (ST)
**************
137/39/2004-CX.4
Annexure
Form of Declaration
To,
The Designated Authority:
Sir,
I hereby make the declaration for being registered in terms of Section 69 of the Finance Act, 1994 (32 of 1994).
1. Name : ……………………………
2. Address of the business premises : …………………
3. Date of Commencement of Business: ……………………….
4. Taxable Services : ……………………………….
5. Date from which service tax is payable: ………………………
Turnover of the services since the date when service tax became payable :
Financial Year Turnover of taxable services rendered Service Tax payable Interest payable, if any
6. The declaration with regards to the Service tax and interest payable given above is correct and true to the best of my knowledge.
7. Along with this declaration I am enclosing the details in Form ST 1 for being registered with Service tax department.
8. Signature : ………………………………
9. Place : …………………………………..
10. Date : ………………………………..
Notes :
(a) The service tax is payable @ 5% upto 14th May 2003, 8% for period between 14th May 2003 and 10th September 2004 and 10% for period after 10th September 2004.
(b) For period after 10th September 2004, education cess @ 2% of Service Tax payable is also to be paid.
(c) Interest is payable @ 24% upto 11th May 2002, 15% for period between 11th May 2002 and 10th September 2004 and 18% for period after 10th September 2004.
(d) In case where services have become taxable from date in middle of Financial Year indicate turnover from that date.
________________________________________
________________________________________
Acknowledgement
To,
____________
____________
____________
Sir,
Your declaration dated has been received. Your registration number in form ST2 is enclosed.
You should deposit the amount of Service Tax and interest as indicated by above within seven days and report compliance.
Encl: Form ST-2
Signature of the Officer receiving the declaration
Place :
Date:
*****************
FORM ST-1
Application for registration under section 60 of the Finance Act 1994 (32 of 1994)
1. Name of the assessee :
2. Address of the assessee :
2A. PAN Number :
3. Address of the premises to be registered :
4. Category of the service :
5. Tax/telex and phone number :
6. Form of organization (individual/company/partnership, etc.) :
7. Additional Information required in the case of stock-broker :
(a) Name of the member, with code No. :
(b) Name of stock exchange registered with :
(c) Date of admission of membership :
(d) Whether member of more than one stock exchange. If so, please give name of the stock exchange with code numbers :
(e) Registration number allotted by securities and Exchange Board of India (copy of certificate) registration may be en¬closed or a copy of application for registration with SEBI may be enclosed :
8. I/We ______________ agree to abide by all the provisions of Service Tax Rules, 1994 and any order issued thereunder.
9. I/We ___________ declare to the best of my/our knowledge and belief that the information furnished herewith is true and com¬plete.
Place :
Date:
Signature of assessee or his authorised representative.
*****************
F.No. 137/39/2004-CX.4
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
New Delhi, the 22nd September, 2004
To
All Chief Commissioners of Central Excise.
Subject: Extraordinary taxpayer friendly scheme for registration of service providers.
I am directed to refer to the D.O. of even number dated 20th September, 2004 on the above mentioned subject. D.G.(ST) has pointed out some error in the annexed "declaration form". The revised declaration forms are enclosed herewith for necessary action at your end.
Yours faithfully
Sd/-
(Sanjiv Srivastava)
Deputy Secretary (CX.4)
Encls : As above
Office of the Chief Commissioners
Central Excise (JZ) Jaipur
CN CCO(JZ) ST/38/2004 3701 Date : 23-9-2004
Copy forwarded to the Commissioner Central Excise, Jaipur-I and Jaipur-II in continuation to this office endorsement of even No. NIL dated 20-9-2004 for information and necessary action please.
Sd/-
Deputy Commissioner (CCO)
Central Excise Commissionerate, Jaipur-II
C.No. V(ST) 30/37/JP-II/04 Dated: 24-9-04
Copy forwarded to the Deputy/Asstt. Commissioner, Central Excise Division, Ajmer/Bhilwara/Chittorgarh/Jodhpur/Udaipur for information & necessary action.
Sd/
24-9-04
Asstt. Commmr.(ST)
*****************
Annexure
Form of Declaration
To,
The Designated Authority :
__________________
Sir,
I hereby make the declaration for being registered in terms of Section 69 of the Finance Act, 1994 (32 of 1994).
1. Name :
2. Address of the business premises :
3. Date of Commencement of Business :
4. Taxable Services :
5. Date from which service tax is payable :
Turnover of the services since the date when service tax became payable :
Financial Year Turn over of taxable services rendered Service Tax payable Interest payable, if any
6. The declaration with regards to the Service tax and interest payable given above is correct and true to the best of my knowledge.
7. Along-with this declaration I am enclosing the details in form ST 1 for being registered with Service Tax department.
8. Signature : _____________________________
9. Place : ______________
10. Date : ____________________________
Notes:
(a) The service tax is payable @ 5% up to 14th May 2003, 8% for period from 14th May 2003 and upto 9th September 2004 and 10% from 10th September 2004.
(b) For period from 10th September 2004, education cess @ 2% of Service Tax payable is also to be paid.
(c) Interest is payable @ 24% up to 11th May 2002,15% for period from 11th May 2002 and up-to 9th September 2004 and 13% from 10th September 2004.
(d) In case were services have become taxable from date in middle of Financial Year indicate turnover from that date.
Acknowledgement
To,
Sir,
Your declaration dated _________ has been received. Your registration number in form ST2 is enclosed.
You should deposit the amount of Service Tax and interest as indicated by above within seven days and report compliance.
Encl: Form ST-2
Signature of the Officer receiving the declaration
Place :
Date :
****************
8. Firstly the question is, as to whether this scheme has a statutory force, so as to term it as a taxing statute. Learned counsel for the Revenue drew our attention to the provisions of Section 83 of the Service Tax Act, whereby provisions of Section 37B of the Central Excise Act, 1944 have been made applicable, and contended, that this circular has been issued in accordance with Section 37B of the Central Excise Act. Section 37B of the Central Excise Act reads as under :-
"37B. Instructions to Central Excise Officers. - The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purposes of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this act shall observe and follow such orders, instructions and directions of the said Board :
Provided that no such orders, instructions or directions shall be issued -
(a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or
(b) so as to interfere with the discretion of the Commissioner of Central Excise (Appeals), in the exercise of his appellate functions."
9. If the aforesaid scheme, or the communication dated 20-9-2004 is read in conjunction with Section 37B, it is clear that it is not covered by Section 37B. The communication emanates from the Hon'ble Finance Minister, who has launched extraordinary taxpayer friendly scheme, while Section 37B does not envisage in launching of any such scheme, rather it comprehends powers of the Board (Central Board of Excise and Customs) wherever it considers it necessary or expedient so to do, for the purposes of uniformity in the classification of excisable goods, or with respect to levy of duties of excise on such goods, issue such orders, instructions and directions. In addressing communication dated 20-9-2004 the Central Excise Board has not even purported to consider any expediency or necessity, for the purpose of uniformity with respect to levy of duties of excise on such goods, to issue such orders, instructions and directions. Simply because the desire of the Hon'ble Finance Minister is published through conduit pipe of the Central Excise Board, it does not have the effect of clothing it with statutory powers, or to attach to it statutory efficacy available consequent upon Section 37 and Section 37B. Thus, in our view, it cannot be said to be statutory notification, issued in exercise of powers under Section 37B.
10. Then, the question is, as to what is the nature of this communication, and the obvious answer is, that it is only an administrative instruction, issued by the Hon'ble Finance Minister, purportedly, to provide benefit to the persons, who earlier failed to register themselves with the department, and in substance is intended to cast the net of service tax wider and wider, and in order to augment the revenue the concessions provided in the communication were sought to be thrown open. Obviously, therefore, the communication has to be read, interpreted, understood, and appreciated, with this spirit, viz. to provide benefit to the defaulters on the one hand, and to cast the net of service tax wider and wider, so also to augment the revenue, on the other hand.
11. With this preface, it may also be noticed, that the term "Scheme" as such has very many parameters to be complied with, while in the present case the communication simply conveys launching of some extra-ordinary tax-payer friendly scheme, and no such scheme has seen the light of the day, except this communication, which only encloses therewith certain proformas. As such it cannot be said to be any "Scheme", in true sense of the term.
12. With this background it may be noticed here, that this communication dated 20-9-2004 had been subject matter of adjudication by various Tribunals, in umpteen number of cases. Before going through those cases, we think it appropriate to first deal with the cases cited by the learned counsel for the Revenue, basically about principles of interpretation.
13. The first judgment cited is the case of The Commissioner of Sales Tax, U.P., Lucknow v. Parson Tools and Plants, Kanpur reported in AIR 1975 SC 1039, and learned counsel referred to para 22 onwards. In this case, the question was, that an appeal was filed before the Dy. Commissioner which was dismissed in default. Then application for restoration thereof was filed, which remained pending for quite some time. In the meantime, the provision authorising dismissal of appeal in default was struck down. Obviously therefore, the original dismissal was treated to be dismissal on merits, and then against that order, revision was filed. Limitation for revision was one year, which, on showing sufficient cause, could be extended for another six months, while the revision was filed after more than 18 months, and the period of time spent in prosecuting the restoration application was sought to be excluded under Section 14 of the Limitation Act, or on its analogy. In that fact situation, the Hon'ble Supreme Court, by referring to various previous judgments of Privy Council etc., based on Section 37(5) of the Arbitration Act, held, that where upper time limit has been prescribed, and sufficient cause is shown, delay can be condoned, in the maximum, only up to a specified time limit, and the analogy of Section 14(2) cannot be imported, apart from the fact, that Section 14, as such, is not applicable, as the authorities under the taxation statutes are not courts, but are administrative authorities. In our view, on principle there is no dispute about this legal proposition.
14. The next case relied upon is, in Bharti Telecom Ltd. v. The Commissioner of Customs, reported in 2001(11)LCX0012 Eq 2001 (134) ELT 0327 (S.C.) = AIR 2002 SC 74. In this case, there was an amnesty scheme, wherein where the assessee had wrongly availed the credit of MODVAT on inputs, and availed the duty free clearance of the goods, claiming exemption under Notification No. 203/92, under the Value Based Advance Licence, in cases, where the assessee was not entitled to avail MODVAT credit, he was required to reverse it, and to pay interest, and other consequences were to flow, for that, an amnesty scheme was floated, requiring interest to be deposited for the period between the date of export and date of reversal, which interest was required to be deposited by 31-1-1997. In that case, the amount was deposited on 7-2-1997 only. In that background, interpreting the scheme, it was held, that such scheme or exemption notification have to be strictly construed, and that the provision in the notification, for deposit of interest by the specified date, has to be interpreted strictly, in the manner stated in the notification, and on no other basis. It was held, that it is well settled, that in taxing statute there is no room for any intendment, and regard must be had to the clear meaning of the words, and that, the matter should be governed only by the language of the notification.
15. In our view, so far as the provision of deposit, under the communication dt. 20-9-2004 is concerned, being 30-10-2004, there is no dispute, that it is required to be strictly construed, and in all the cases in hand, admittedly, the amount has been deposited before the said date, as obviously if the amount had not been deposited, the assessee would not have been entitled to any benefit of this communication. There is also no dispute about the proposition, that in taxing statute there is no room for any intendment, and regard must be had to the clear meaning of the words, and that the matter should be governed only by the language of the notification. The difficulty is, that this communication dt. 20-9-2004 is neither notification, nor a taxing statute, rather as held above, it is only an administrative instruction, granting benefits and reliefs, in an attempt to cast service tax net wider and wider, and to augment the revenue.
16. The next judgment relied upon is, in Union of India & Ors. v. Wood Papers Ltd. reported in 1990 (047) ELT 500. (S.C.) = (1990) 4 SCC 256. In this case also, it has been held, that exemption notification has to be read as a whole, and is required to be considered as a whole. There is no dispute about the legal proposition propounded therein.
17. The next case relied upon is in CIT, Delhi v. Modi Spinning and Weaving Mills Co. Ltd., reported in 1992 Suppl (1) SCC 32. This judgment in our view, is a judgment on its own facts, and is of no assistance to either side.
18. Now we take up the cases cited on either side, which have considered this communication dt. 20-9-2004. Of course, we have not been made available the copy of judgment in Amit Kumar Maheshwari's case. However, the learned counsel for the assessee first relied upon the judgment in C.C.E., Bhopal v. Bharat Security Services & Worker reported in 2005(06)LCX0114 Eq 2006 (003) STR 0703 (T) = 2005 (188) ELT 454. This is a judgment rendered by Shri S.S. Kang, the learned Single Member (Vice-President of the Principal Bench, New Delhi) and in that case, the orders in appeal had set aside the penalties imposed on assessee, as the assessee had paid service tax along with interest prior to 20-9-2004, by holding that Extraordinary Tax Payer Friendly Scheme was circulated vide letter dt. 23-9-2004, whereunder any service provider, who got registered up to 30-10-2004, are not liable for any penal action and thus, in view of the immunity from penal action, no penalty could be imposed on the assessee, as they had paid service tax prior to 30-10-2004. A contention was raised therein, that the assessee was already registered prior to the floating of the scheme and, therefore, are not entitled to benefit of scheme, and it was held, that the service provider who got registered, and paid service tax, during Extra-ordinary Tax Payer Friendly Scheme up to 30-10-2004, are not liable to pay any penalty, therefore, no infirmity was found in the order of the Commissioner, as the assessee had paid service tax prior to 30-10-2004, they are not liable to any penalty. This judgment is dated 13-6-2005 (28-4-2005).
19. Then the learned counsel placed reliance on a judgment rendered by a learned Single Member M.V. Ravindran dt. 5-12-2006, rendered in Appeal No. 312/2006, which has been passed, following the judgment in Amit Kumar v. CCE, Jaipur-II, reported in 2006 (002) STR 506, and C.C.E., Bhopal v. Bharat Security Services & Worker's case. It would suffice to say, that Appeal No. 54/2007 in this bunch is filed against this very judgment dt. 5-12-2006.
20. The next judgment relied upon is Tele Tech Communication v. Commissioner of C. Ex. dt. 4-6-2007 [2007(06)LCX0076 Eq 2007 (007) STR 0695 (T)], rendered by learned Single Member, Shri C.N.B. Nair, reported in MANU/CE/8215/2007. In that case, the Tribunal had found, that the scheme makes it clear, that service providers were welcome to avail of the scheme, irrespective of whether proceedings have been initiated or not. In that view of the matter, the assessee was held entitled to the benefit of exemption from penalty. In that case, the assessee had applied for registration only after being served with a notice.
21. Then the next case relied upon is the order of the Tribunal West Zonal Bench, Mumbai dt. 17-10-2006 in Laxmichand Dharshi v. Commissioner of C. Ex., rendered by the learned Single Member Shri K.K. Agarwal, reported in 2006(10)LCX0114 Eq 2007 (005) STR 0128 (T) = MANU/CM/7027/2006. In that case also, the facts were, that the assessee did not pay tax, nor did file return, for the period 1-10-2002 to 30-4-2003, and deposited the tax and interest on 10-2-2004. Penalty was defended on the ground of delay being unintentional. However, when the matter went to the Tribunal, relying on the judgment in Bharat Security Services & Worker's case, it was held, that there has been a delay on the part of the assessee in paying the service tax. However, taking into consideration the Tax Payer Friendly Scheme, introduced by the Government, and the Tribunal decision in the case of Bharat Security Services & Worker's case, the penalties were set aside.
22. The next judgment relied upon is again of Tribunal West Zonal Bench, Mumbai dt. 4-9-2006 rendered by the learned Member, Archana Wadhwa in A.R. Sandeep C. Sikchi v. Commissioner of Central Excise, reported in 2006(09)LCX0148 Eq 2006 (004) STR 0587 (T) = MANU/CM/0353/2006. In this case also, the amount of service tax for the period October 1998 to March 2003 stood paid on 26-7-2003, show cause notice was issued for penalty on 6-12-2004, which was dropped. In appeal the Commissioner imposed the penalty, and the Tribunal in further appeal, relying upon the judgment in Bharat Security Services & Worker's case held, that the assessee had admittedly paid the tax, and had themselves got registered prior to 31-10-2004, there is no justification for enhancement of penalty imposed on the assessee. Thus the penalty was set aside.
23. The next case relied is again of Tribunal West Zonal Bench, Mumbai dt. 28-5-2007, in Arc. Dinesh Burad v. Commissioner of Central Excise and Customs, rendered by learned Member, M.V. Ravindran reported in 2007(05)LCX0407 Eq 2008 (011) STR 0250 (T) = (2008) 12 STT 47. In this case, the assessee failed to pay service tax from October 2001 to March 2003, and had paid the entire amount of service tax by 1-3- 2004. The adjudicating authority imposed penalty of Rs. 500/-, the Commissioner enhanced the penalty. In further appeal to the Tribunal, the Tribunal found, that the Central Government of India came out with the Extraordinary Tax Payer Friendly Scheme, for those persons who were not registered and were not paying service tax. The said scheme operated on the basis, that any person who has not registered but gets himself registered and discharged service tax liability and interest before 30-10-2004, no penal provision could be invoked against such assessee. Then also proceeded to rely upon Bharat Security Services & Worker's case, and penalty was set aside.
24. The next case relied upon is again of Tribunal West Zonal Bench, Mumbai dt. 27-6-2008, rendered by the same learned Member, in Commissioner of Central Excise v. R.S. Vora, reported in MANU/CM/0334/2008, where again relying upon the judgment in Bharat Security Services & Worker's case, the revenue's appeal was dismissed.
25. The next case relied upon is of Tribunal West Regional Bench, Ahmedabad dt. 23-3-2007, in Care Electronics Ltd. v. Commissioner of C. Ex., rendered by the learned Member, Archana Wadhwa, reported in 2007 (007) STR 273. In this case, the tax for the period 1-7-2003 to 30-4-2004 was not paid. However, on detection by Revenue the same was deposited on 6-8-2004, along with interest, and the learned Tribunal, relying on the judgment in Bharat Security Services & Worker's case held, that no penalty is imposable on the assessee, and the penalty was set aside.
26. The next judgment relied upon is of Principal Bench Delhi dt. 14-2-2006, in CCE v. Shri Kamlesh Kumar Agarwal, Prop, of Mamta Travels, reported in 2006 (004) STR 205, rendered by the learned Member, Shri M.V. Ravindran. In this case, the Commissioner had set aside the penalty by holding as under :-
"As regards the imposition of various penalties under the different Sections quoted above for violation of the relevant provisions, I find that there are catena of decisions of various appellate for a to the effect that in the initial stages of introduction of this public oriented wide spread new levy, many of new assessees being ignorant, such procedural delays in taking up of registration and consequent filing of the returns etc. a lenient view can be taken. This was precisely the reason as to why many new Voluntary Disclosure schemes for voluntary compliance like Extra Ordinary Tax Payer Friendly Scheme declared under Board's F.No. 137/39/2004-Cx.4 dated 23-9-04 to be operational upto 30-10-04 in respect of the assessees who had not at all. complied with the provisions of Service Tax Law had been launched waiving the various penalties under the aforesaid Sections 75A, 76 & 77 etc. When the assessees who did not at all comply with the ST. Law can be given immunity provided they pay the Service Tax along with appropriate rate of interest, there is no tangible and logical reason as to why the law abiding assessee who had got himself registered more or less in time and had also started paying the Service tax along with interest, much before the new scheme became operational, should be denied the benefit of waiver of the penal provisions referred to above for late registration, delay in filing of relevant returns etc. all of which are procedural in nature. In view of my aforesaid findings, I am inclined to waive the penalties imposed on the said party."
27. And thus the finding was upheld by the learned Tribunal, in view of the aforesaid circular dt. 23-9-2004.
28. Then the next judgment relied upon is dt. 18-1-2006, of the Principal Bench, New Delhi rendered by the same learned Member, M.V. Ravindran in Commissioner of C. Ex. v. R.K. Electronics Cable Network reported in 2006 (002) STR 153, wherein also the Commissioner had practically recorded identical finding, as recorded in Kamlesh Kumar's case, and learned Tribunal relying upon the judgment in Bharat Security Services & Worker's case upheld that order.
29. The last case relied upon is judgment dt. 29-2-2008, rendered by West Zonal Bench at Ahmedabad, in jay Security Services v. Commissioner of Customs, C. Ex. and Service Tax, reported in 2008 (010) STR 602, rendered by the learned Member Archana Wadhwa. In that case, the period involved was April 1999 to March 2004. The assessee was registered with the department on 29-9-2003, and the penalty was defended on the ground, that assessee was not aware of the leviability of service tax upon him. Then in appeal reliance was placed on scheme floated by communication dt. 20-9-2004, and contended, that admittedly, assessee has paid tax before 30-10-2004, while the counsel for the Revenue argued, that the assessee was registered with effect from 29-9-2003, and as such the provisions of this scheme would not apply, and reliance was placed on CCE. Bhopal v. Mankodi Enterprises, reported in 2006 (002) STR 150, and Pankaj Oil Trading Corporation v. CCE, Ahmedabad, reported in 2007 (006) STR 44, and the learned Tribunal found, that both these cases related to payment of service tax after registration, whereas in the present case, the dispute is, as regards the service tax prior to the period of registration. As such, the ratio of the law as declared in both the cases is not applicable. Then relying upon Bharat Security Services & Worker's case, it was held, that assessee is entitled to the benefit of the said scheme, if the service tax for the past period stands paid by him by 30-10-2004. It was also noticed, that Bharat Security Services & Worker's case has been followed by the Tribunal in the case of Soldiers Indus. Security Agencies v. CCE, Nasik, reported in 2007 (007) STR 283.
30. Now we may refer to the two judgments, in Mankodi Enterprises' case and Pankaj Oil Trading Corporation's case, which have been relied upon by the learned counsel for the Revenue, and as noticed, had been cited on behalf of Revenue in Jai Securities Services' case. In Mankodi Enterprises' case the assessee was liable to pay tax from 1-9-1999 onwards. The assessee took registration of service tax in October 2003, show cause notice was issued demanding service tax and penalty, which was adjudicated by the Dy. Commissioner, Central Excise, who demanded service tax and imposed various penalties, the levy of service tax was upheld, but the penalties imposed under Section 75A, 76, 77 and 78 were dropped, on the ground of circular dt. 23-9-2004. It was argued by the Revenue, that the assessee was required to take out service tax registration from 1999, and was required to file service tax return, and pay the service tax regularly, but the assessee has not paid tax till October 2003, and when the department asked the assessee to pay tax, then they took registration and paid service tax, and submitted the return in October 2003, and that the tax was paid by them only after adjudication of the proceedings, therefore, they are not covered by the voluntary disclosure scheme. On the other hand, reliance was placed on the said circular. The learned Tribunal noticed, that the Commissioner had dropped the penalty, on the ground, that under the said circular, when the assessee, who did not at all comply with the service tax law, can be given immunity, provided they pay service tax with appropriate rate of interest, and there is no tangible and logical reason as to why the law abiding assessee, who had got himself registered more or less in time, and had also started paying the service tax in time, much before the new scheme became operational, should be denied the benefit of waiver of penalty. The learned Tribunal found, that the circular was only with respect to those service providers, who had earlier failed to register themselves due to ignorance or for any other reason, and who came forward and paid the past liability within the period prescribed under this circular. It was found, that this circular was not applicable for those persons, who had already taken registration, or were paying service tax. Thus, the order waiving penalty, on the basis of circular was set aside. It is a different story, that ultimately in the order, the learned Tribunal modified the penalty, and reduced to a total amount of Rs. 17,500/-.
31. Then in Pankaj Oil Trading Corporation's case, which is a judgment dt. 20-11-2006, did consider the judgment in Bharat Security Services & Worker's case, and Mankodi Enterprises' case as well. In that case the assessee had received commission for the period from 1-9-2000 to 31-6-2001 and 1-7-2001 to 31-12-2001, and was liable to pay service tax, and even after obtaining registration, service tax was not paid in its entirety, and did not file any service tax return. The Assistant Commissioner found, that the assessee failed to disclose the value of taxable service, and suppressed it, and thereby evaded the service tax, by not filing the returns. Then, the tax liability, after adjusting the amount already paid, was adjudicated, and penalty was imposed. The Appellate Commissioner reduced the penalties. Then, before the learned Tribunal, the assessee relied upon the Amnesty scheme, and also relied upon the judgment of learned Single Member Bench, in CCE, Bhopal v. Industrial Army reported in 2006 (003) STR 526, where the penalties were set aside, on the ground that "there was no tangible and logical reason as to why the law abiding assessee who had got himself registered more or less in time and had also started paving the service tax along with interest, much before the new scheme became operational, should be denied the benefit of waiver of the penal provisions referred to above for late registration". Likewise the judgment in Amit Kumar Maheshwari's case and Bharat Security Services & Worker's case were also relied upon, while the Revenue relied upon the judgment in Mankodi Enterprises, and the learned Tribunal, in that case, in para-7 found, that the scheme was only in respect of service provider, who had earlier failed to get themselves registered, due to ignorance, or for any other reason, and who came forward and paid past liability within the prescribed period in the circular. Therefore, it was not found to be applicable to the persons who have already taken registration, or were paying service tax. It was also found, that it is evident from the wordings of the scheme, as announced under the circular dt. 20-9-2004, that it was intended only for instant registration of service providers, who could make declaration to the department, with regard to past liabilities towards the service tax and interest payable. Then, the case was considered on merits, and the liability was upheld.
32. At this place we may observe, that these two cases in Mankodi Enterprises and Pankaj Oil Trading Corporation are not the cases regarding the payment of service tax after registration, as assumed by the learned Member in Jay Security Services' case, for distinguishing these two judgments. Be that as it may. The fact also does remain, that in Jay Security's case, the amount did involve the amount for the period, which included the period after registration, inasmuch as the period involved was April, 1999 to March, 2004, while the assessee was registered on 29-9-2003. Thus, in a way the judgment in jay Security Services' case is required to be considered to take a view, that even in cases where the amount relates to period prior to registration or subsequent to registration, the scheme does apply.
33. These are the only cases brought to our notice on either side. We make it clear that, no judgment of any High Court, or the Hon'ble Supreme Court, has been cited on either side, which may have taken into consideration the Amnesty Scheme, circulated vide this communication dt. 20-9-2004.
34. In our view, thus, the majority of the judgments do take the view, that the benefit of the scheme is available to the assessees, who were already registered though belatedly, and had deposited the entire amount of tax and interest, before the cut off date, prescribed in the scheme being 30-10-2004.
35. We feel constrained to consider the norms of judicial propriety, repeatedly laid down by the Hon'ble Supreme Court, in the matter of taking different views by the coordinate Benches, and the requirement of referring the matter to the Larger Bench, if a different view is sought to be taken.
36. If all the judgments mentioned above are considered on that basis, it is clear, that all the judgments have been rendered by the different learned Single Member of the different Benches, and so far Principal Bench of New Delhi is concerned, there also a view, different from the view taken in Mankodi Enterprises and Pankaj Oil Trading Corporation's cases has been taken.
37. Significantly the first judgment is in Bharat Security Services & Worker's case, which is rendered by the Principal Bench at Delhi, and is judgment dt. 13-6-2005, while the judgment in Mankodi Enterprises's case is also of the Principal Bench, New Delhi dt. 6-12-2005, and does not take notice of the judgment rendered by the learned Vice-President on 13-6-2005 in Bharat Security Services & Worker's case. Then, all other judgments cited on behalf of the assessee are subsequent judgments. Pankaj Oil Trading Corporation's case of course does consider the previous judgments, but then, the learned Member has taken upon himself the task of taking a different view, without adhering to the requirement of judicial propriety, of referring the matter to Larger Bench.
38. This leaves us to consider, as to whether we should countenance the view taken in Pankaj Oil Trading Corporation's case and Mankodi Enterprises's case, or the view taken in all other cases. This is one aspect of the matter.
39. The other equally important aspect of the matter is, that admittedly, the Revenue, in all, or even in any of the matters, which judgments have been referred to and relied upon by the learned counsel for the assessee, except that Bohra Pratisthan's case [2006(12)LCX0267 Eq 2007 (008) STR 0278 (Tribunal)], which under appeal before this Court, has not challenged further. We are aware of the judgment of the Hon'ble Supreme Court in C.K. Gangadharan's case [2008(07)LCX0024 Eq 2008 (228) ELT 0497 (S.C.)], which has also been relied upon by the learned counsel for the Revenue, but then, in that case the Hon'ble Supreme Court has held, that merely because in some cases the Revenue has not preferred appeal, that does not operate as a bar, for the Revenue to prefer an appeal in another case, where there is just cause for doing so, or it is in public interest to do so, or divergent views are expressed by the Tribunals or the High Courts.
(Emphasis supplied)
40. To say the least, the present situation, in view of the things discussed above, does not fall, within any of the exception laid down by the Hon'ble Supreme Court in para-13 of the judgment in C.K. Gangadharan's case, and therefore, it has to be taken into account, that it is the consistently established legal position, laid down by various Tribunals of the country, that in such cases, where the assessee is registered, even before the commencement of the Amnesty Scheme, and has paid all dues of tax and interest, before the cut-off date given in the scheme, being 30-10-2004, would be entitled to the benefit of the Amnesty Scheme. And therefore there is no occasion for this Court to unsettle the settled position, and now give rise to upheaval, to generate litigation, even in the matters, which stand closed. This is second aspect of the matter.
41. Still most important aspect of the matter is, that even if we were to consider the matter on merits, as held above, the communication dt. 20-9-2004 is only an administrative instruction, issued for the benefit of the service providers, who volunteered to get themselves registered, and discharged all their liabilities of tax and interest, up to the cut-off date, by providing immunity from penalty. This is beneficial part of the instruction for the service providers, while it is sought to be beneficial to the State, i.e. the Revenue, viz. it is intended to cast the net of the service tax wider and wider, and to augment the revenue. Thus, the instructions are calculated with the motive to benefit both sides, the service provider as well as the Revenue, and as such is not a taxing statute. Therefore, it is required to be implemented in the manner, which is not discriminatory, and which is reasonable, obviously to both the parties.
42. If considered from that stand point, we find ourselves to be leaning towards the interpretation, that when the person who has not got registered till issuance of the communication, if is intended to be given the benefit of immunity from penalty, the person who has already got himself registered, and is in the default of payment of interest or tax, cannot be denied the immunity from penalty, provided of course, he strictly complies with the requirement of the communication, with regard to deposit of the amount, positively before the cut-off date.
43. It is required to be grasped, that the communication is of 20-9-2004. In some judgments it has been referred to as 22-9-2004, while in some judgments it has been referred to as 23-9-2004. There may be a controversy, as to what is the starting point of the scheme, i.e. 20-9-2004 or 23-9-2004, or from the date the person concerned comes to know of it. The significance of this confusion is, that if the interpretation sought to be projected by the Revenue is taken, and if it is considered that the Scheme commenced on 23-9-2004, then even the person, who may have got himself registered on 21-9-2004, and happened to be defaulter, will have to be denied the benefit of immunity, or even the person who got himself registered on 22-9-2004, and is a defaulter will have to be denied the benefit of immunity, while on the other hand if it is taken to have commenced on 20-9-2004, then such person will get the benefit of immunity. Thus, the person even without knowing of the scheme, may have got himself registered on 21-9-2004, and would be in dilemma as to whether he is to get benefit of the immunity or not, such interpretation cannot be put on the Amnesty Scheme. Obviously the communication dt. 20-9-2004 does not prescribe the precise starting point of time of the scheme.
44. Carrying the things further logically, if the scheme is taken to have commenced on 20-9-2004, then if the benefit is available to the person who gets himself registered on 20-9-2004, despite being defaulter for any length of time, the benefit cannot be denied to a person who may be merely technically defaulter, and who in good sense, thought it proper to get himself registered on 19-9-2004 itself, and did not allow his default to continue for one more day. The interpretation sought to be projected by the Revenue, does not thus stand the scrutiny. On the other hand, a proper reading of the communication does only show, that it is intended to provide immunity to the defaulters, who choose to deposit the arrears of tax and interest by the cut-off date, and obviously, since for payment or deposit of the amount, the formalities of registration and declaration are necessary, the forms have been enclosed with the communication, and it has been directed, that the declaration would be accepted, and they would be given spot registration without any sort of questions. Much of the stress laid on the requirement of submitting declaration cannot be accepted, for the simple reason, that as observed above, the forms are prescribed under the relevant Rules of Service Tax itself; the Application Form being ST-1, Acknowledgment also forming part of the same form. So far declaration proforma is concerned, if it were to be read, would show, that it is only in the nature of forwarding letter of the application for registration, and nothing beyond that. Thus all that this so called scheme means is, that even if a person comes forward to apply for registration, and pays all arrears of tax and interest, before the cut-off date, he is conferred immunity from any sort of penalty. In that view of the matter, it cannot be said, that the immunity should be denied to the person who has already got himself registered.
45. Then, in the first para it is clearly mentioned that the scheme aims to register all service providers on the basis of declaration, and with this, with a conjunctive word "and who had earlier failed to register themselves". This "having earlier failed to register" cannot be confined to mean earlier to 20-9-2004, or 23-9-2004, but is required to mean, or construed to mean, "who failed to register at appropriate time as required by the Service Tax Act".
46. Thus, considering the matter from any aspect whatever, as discussed above, in our view, the view taken in Mankodi Enterprises, and Pankaj Oil Trading Corporation's case cannot be accepted, and the view taken in all other cases is required to be accepted. It is required to be held, that the benefit of the circular dt. 20-9-2004, does very much cover the case of the present assessees, as well.
47. The question as framed is accordingly answered against the Revenue, and in favour of the assessee. The appeals are dismissed. However, with the clarification, that if the amount of penalty to the extent of 25%, has been deposited by any of the assessees in these five appeals, then that amount of penalty need not be refunded to them.
Equivalent 2009 (233) ELT 0311 (Raj.)
Equivalent 2009 (013) STR 0119 (Raj.)
Equivalent 2009 (090) RLT 0761 (Raj.)
Saturday, April 25, 2009
Shree Rajasthan Texchem versus Union of India
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
(1) CENTR.EXCISE APPEAL No. 2 of 2005
SHREE RAJASTHAN TEXCHEM LTD
V/S
UNION OF INDIA & ORS
(2) CENTR.EXCISE APPEAL No. 2 of 2003
SHREE CEMENT LTD
V/S
UNION OF INDIA & ORS
(3) CENTR.EXCISE APPEAL No. 3 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(4) CENTR.EXCISE APPEAL No. 4 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(5) CENTR.EXCISE APPEAL No. 5 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(6) CENTR.EXCISE APPEAL No. 6 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(7) CENTR.EXCISE APPEAL No. 14 of 2004
SHREE SHYAM FILAMENTS
V/S
UNION OF INDIA & ORS
(8) (8)
M/S LAKSHMI CEMENTV/SUNION OF INDIA & ORS
(9) CENTR.EXCISE APPEAL No. 1 of 2005
SHREE RAJASTHAN SYNTEX LTD
V/SUNION OF INDIA & ORS
(10) CENTR.EXCISE APPEAL No. 7 of 2005
RAJASTHAN PETRO SYNTHETCS LTD
V/SUNION OF INDIA & ORS
Mr. Dinesh Mehta, Mr. Vikas Balia, Mr. Ramit Mehta &
Mr. Avinash Acharya for the appellants.
Mr. Rishabh Sancheti & Mr. V.K. Mathur, for the
respondents.
Date of Order : 26.3.2008
HON'BLE SHRI N P GUPTA,J.
HON'BLE SHRI DEO NARAYAN THANVI,J.
ORDER
(Per Hon'ble Gupta, J.)
This bunch of appeals involve common question of
law, being as under:
“Whether in the facts and circumstances of
the case, the Tribunal was right in coming to
the conclusion that under Section 112(2)(b)
of the Finance Act, 2000 interest can be
levied even without there being adjudication
of show cause notice, which are pending
decision at the time of commencement of the
aforesaid provision?”
It may just by the way be mentioned, that in four
appeals, being no.6/03, 5/03, 4/03 and 3/03 one additional
question is also involved, and framed, being as to whether
interest could be levied if at all only uptill 25.10.2000,
the date on which the cheque was presented in the Bank.
The facts in all the matters are almost common,
except the final product manufactured by the different
appellants in different appeals.
We think it appropriate to give brief resume of
the facts giving rise to the present controversy.
On different dates, notices were issued by the
competent authority, calling upon the assessees to show
cause as to why the amounts mentioned in the notice
representing Modvat credit, availed by them on HSD oil, be
not recovered, as the Modvat credit is not available to
them. It is at this stage, that various petitioners filed
writ petitions before this Court, challenging the very
jurisdiction of the authority to initiate the proceedings,
and for that purpose the assessee relied upon certain
judgments of the Tribunal, rendered in the case of India
Cements Ltd. Vs. CC & CE, Hyderabad reported in 1997(95)
ELT-520, and Jindal Polymers Vs. Commissioner of Central
Excise Indore reported in 1999(114) ELT-322, wherein the
learned Tribunal had taken the view, that the Modvat credit
is available on the HSD oil to the assessee. In those writ
petitions, notices were issued, and interim stay were
granted. The writ petitions were filed during the period
1997 to 1999. It was during pendency of these writ
petitions, that the Finance Act, 2000 came to be passed,
which received the assent of the President on 12.5.2000.
Section 112 whereof reads as under:
“112. Validation of the denial of credit of duty
paid on high speed diesel oil.-(1) Notwithstanding
anything contained in any rule of the Central
Excise Rules, 1944, no credit of any duty paid on
high speed diesel oil at any time during the
period commencing on and from the 16th day of
March, 1995 and ending with the day, the Finance
Act, 2000 receives the assent of the President,
shall be deemed to be admissible.
(2) Any action taken or anything done or purported
to have been taken or done at any time during the
said period under the Central Excise Act or any
rules made thereunder to deny the credit of any
duty in respect of high speed diesel oil, and also
to disallow such credit to be utilised for payment
of any kind of duty on any excisable goods shall
be deemed to be, and to always have been, for all
purposes, as validly and effectively taken or
done, as if the provisions of sub-section (1) had
been in force at all material times and,
accordingly, notwithstanding anything contained in
any judgment, decree or order of any court,
tribunal or other authority;
(a) no suit or other proceedings shall be
maintained or continued in any court, tribunal or
other authority for allowing the credit of the
duty paid on high speed diesel oil and no
enforcement shall be made by any court, tribunal
or other authority of any decree or order allowing
such credit of duty as if the provisions of subsection
(1) had been in force at all material
times;
(b) (b) f
duty, which have been taken or utilised but which
would not have been allowed to be taken or
utilised, if the provisions of sub-section (1) had
been in force at all material times, within a
period of thirty days from the date on which the
Finance Act, 2000 receives the assent of the
President and in the event of non-payment of such
credit of duty within this period, in addition to
the amount of credit of such duty recoverable,
interest at the rate of twenty four per cent, per
annum shall be payable, from the date immediately
after the expiry of the said period of thirty days
till the date of payment.
Explanation.-For the removal of doubts, it is
hereby declared that no act or omission on the
part of any person shall be punishable as an
offence which would not have been so punishable if
this section had not come into force.”
On passing of this Finance Bill, these writ
petitions were amended, and the provisions of the Finance
Act were challenged being ultravires to the Constitution.
Of course, those amendment applications were allowed, and
the bunch of the writ petitions was ultimately decided by
the Division Bench, vide judgment dt. 3.4.2002, holding the
validation Act to be intra-vires, and dismissing the writ
petitions, finding no merits therein.
It may also be mentioned at this stage, that one
matter, being in Commissioner of Central Excise, Hyderabad
Vs. Associated Cement Companies Ltd. Mancherial, reported
in (2003) 9 SCC-74, came to be decided by Hon’ble the
Supreme Court, and therein a view was taken, that the
Tribunal was justified in arriving at the conclusion, that
the assessee was entitled to get the benefit of
notification till Rule 57-B is amended, and the appeal was
dismissed. Then, it was held that the assessee was entitled
to Modvat credit. However, a review petition was filed,
which was allowed, vide judgment dated 8.11.2004, reported
in 2005(180) ELT-3, wherein it was found, that
inadvertently attention of the Court was not drawn to
provisions of Section 112 of Finance Act, 2000. Then, the
provisions were quoted, and it was found, that sub-section
(1) of Section 112 shows, that no credit is admissible on
any duty paid on high speed diesel oil at any time during
the period commencing on and from the 16.3.1995 and ending
with the day the Finance Act, 2000 received the assent of
the President, which was given on 1.4.2000. It was noticed,
that the period in question comes under the purview of
Section 112(1), and it was held, that since the aforesaid
provision provides that notwithstanding anything contained
in Rules, the credit is not admissible, the assessee was
not entitled to get the benefit of Rule 57B. Then in para-5
it was held, that though the assessee is not entitled to
the benefit as aforesaid, yet we cannot ignore the fact,
that the aforesaid amendment came into force on 1.4.2000,
when the order of the tribunal dated 8.9.1999, in favour of
the assessee, was holding the field, and it is being set
aside today by this order. In this view, the time to make
payment under Section 112(2)(b) has to commence only from
today. The constitutional validity of Section 112 of the
Finance Act was attempted to be raised, but was not
permitted in that appeal, and was left open.
It is in these facts, that soon after passing of
the judgment by this Court on 3.4.2002, the notices issued
and the various issues were carried to logical conclusion,
obviously in the light of the provisions of Section 112,
and it was held, that Modvat credit is not available, and
the assessee has wrongly taken the credit, of the specified
amount in each case, during the period concerned. Then, in
some cases it was found, that the assessee had already
deposited the amount, which was ordered to be appropriated
to the Government account, and imposition of penalty was
denied, while in some cases disallowing credit of the duty
in specified amount, demand of the said amount was
confirmed, and the assessee was directed to deposit the
amount in the appropriate account, as the case may be.
The fact does remain, that the notice initially
issued, obviously under Rule 57-I, were carried to logical
conclusion, after the decision was rendered by this Court
on 3.4.2002, obviously because, during the interregnum
period there were interim stay by this Court.
Then, the orders of the original authority were
challenged by the Department in appeal, and the learned
Appellate Authority allowed the appeal, and held, that the
present appellants are liable to pay interest @ 24% p.a.
from 12.6.2000 till the date of payment, in view of the
provisions of Section 112. It was also found, that the
adjudicating authority issued notice to the assessee,
incorporating the liability of interest with the demand in
the impugned notice.
Appeals against these orders were filed before
the learned Tribunal, and the appeals of one of the
assessee, being M/s. Maharaja Shree Umaid Mills Ltd.
(Appeal No. E/45-48/2003/NB/C and Appeal No.
E/263/2003/NB/C did come to be decided by the learned
Tribunal vide judgment dt. 1.10.2003, holding, that the
extent of credit that has been taken or utilised, does not
require any determination by the Central Excise Officers,
and that, in the instant case no such determination is even
envisaged, as Section 112(2)(b) is very categoric in its
terms, and it says “recovery shall be made of all the
credit which have been taken or utilised but which would
not have been allowed to be taken or utilised, if the
provisions of Sub-section (1) had been in force at all
material times”. Thus, if any credit of duty paid on HSD
had been taken, the same was liable to be recovered, and
the provision contains a clear mandate to the persons, who
have taken such credit, to make payment, as well as to the
Departmental authorities to effect recoveries, and that for
making payment also, issuance of a communication, or an
order directing the payment of the credit taken, is not a
pre-condition. This is the judgment reported in 2003 (158)
ELT-734, and is under challenge before us in Appeals Nos.
6/03, 5/03, 4/03 and 3/03. Then, the orders were passed by
the learned Tribunal, following the judgment in Maharaja
Shree Umaid Mills's case, in other matters also.
This is how challenging these orders, all these
appeals filed by the appellants are before us, and have
been admitted on the substantial questions of law as
noticed above.
Arguing the appeals it was contended, that the
interest is recoverable, or is to be recovered, in addition
to the amount of credit, on such duty, and that, the main
nonobstante clause is attached to sub-section (1) only, and
sub-section (2) is not enacted with any such nonobstante
clause. Obviously, since the recovery is to be made with
interest, till the action for recovery is taken, no
liability for interest can be levied. Then, referring to
provisions of Section 11A, and Rule 57-I, it was contended,
that before effecting any recovery, notice is required to
be served to show cause as to why such credit should not be
disallowed, and where the credit has already been utilised,
the amount to be not utilised by him, and then,
determination of amount of which credit is disallowed, is
to be made, whereupon assessee is to make payment of the
amount equivalent to the credit disallowed, and the payment
of such amount determined, is to be made within three
months from the date of demand notice, and in addition to
the amount so determined, interest, at such rate, as may be
fixed by the Central Board of Excise and Customs under
Section 11AA of the Act, from the date immediately after
the expiry of the said period of three months till the date
of payment, is also payable, and that, in all the present
cases, such notice to show cause had already been served
upon them, at a point of time when the provisions of
Section 112 were not on the Statute Book, but then, those
notices have to be carried to their logical conclusion, and
determination is to be made, demand notice is to be issued,
payment can be made within the permissible time period
thereafter, and the liability of interest arises only from
the date after expiry of such permissible period of time.
Referring to the judgment of original authority,
in Maharaja Shree Umed Mills's case, it was contended, that
in those cases amount was deposited in October, 2000, but
the amount could not be appropriated before the
adjudication, and it was by the order of the original
authority only, that amount has been ordered to be
appropriated in Government account. It is also contended,
that the Act, or the Rules, does not contain any provision
for assessee's entitlement to interest, in case, on
adjudication it is found, that any excess amount has been
paid by the assessee, obviously therefore, and as a
necessary corollary, no liability of interest could be
attracted against the assessee also, before adjudication.
Then, the next submission made was, that a bare
reading of provisions of Section 112, even as they are,
obviously because by the judgment dt. 3.4.2002 it has been
held to be intra-vires, and may be that the judgment dt.
3.4.2002 is already under appeal before Hon'ble the Supreme
Court, and therefore, taking the provisions of Section 112
on the face value, even notwithstanding the incorporation
of nonobstante clause, it does not even contemplate absence
of any adjudication, much less does it even purport, to do
away with the requirement of adjudication. Reliance in this
regard was placed on two judgments of the Tribunal, in the
cases of Poddar Pigments Ltd. Vs. Commissioner of Central
Excise, Jaipur reported in 2003(155) E.L.T. 484, and L.M.L.
Ltd. Vs. Commissioner of Central Excise reported in 2003
(162) E.L.T. -718. It was then submitted, that the
validation Act, being Section 112, covers only the
specified period, from 16.3.1995 upto the period ending
with the day the Finance Act 2000 received the assent of
the President, and the adjudication is necessary, also
because, there may be circumstances, like, the assessee may
be company which may have gone in liquidation, and assets
may have been taken over by the Official Liquidator after
the secured creditors may have realised their dues by
remaining outside the liquidation, and then the question
may arise about the priority of the charge of the
Government revenue, even qua the secured creditors,
obviously for that purpose, the determination of the
amount, and determination of the priority, has to be
considered and made, and therefore, making of
determination, according to Section 11A, or Rule 57I, is a
sine qua non. Then, by reading Section 112 again and again
it was contended, that all that is contemplated by subsection
(1) is, that notwithstanding anything contained in
any rule of the Central Excise Rules, 1944, no credit of
any duty paid on high speed diesel oil at any time during
the relevant period shall be deemed to be admissible.
According to learned counsel, this only means, that this
creates a fiction, that for the purpose of Rule 57-I, it
would mean, that the credit on duty of inputs has been
taken on account of an error, omission or misconception,
and means nothing more. Then, reading sub-section (2) it
was contended, that all that it contemplates is, that any
action taken, or anything done, or purported to have been
taken or done, at any time during the said period under the
Central Excise Act or any rules made thereunder, to deny
the credit of any duty in respect of high speed diesel oil,
and also to disallow such credit to be utilised for payment
of any kind of duty on any excisable goods shall be deemed
to be, and to always have been, for all purposes, as
validly and effectively taken or done, as if the provisions
of sub-section (1) had been in force at all material times,
and accordingly, notwithstanding anything contained in any
judgment, decree or order of any court, tribunal or other
authority, which according to the learned counsel only
means, that if any action has been taken for denying the
credit, that is validated, and if any order is passed
permitting the credit, still the credit will stand denied
obviously, therefore, action is to be taken for recovery of
the amount of credit taken, and again, obviously, by taking
appropriate proceedings, in accordance with law. Then,
submitting on clause (b), which is precise bone of
contention, of sub-section(2), it was contended, that all
that it permits is that, or provides that, recovery shall
be made of all the credit of duty, which have been taken or
utilised, but which would not have been allowed to be taken
or utilised, if the provisions of sub-section (1) had been
in force at all times, and then after putting a comma, it
is provided, that action is to be taken within 30 days from
the date on which the Finance Act receives the assent of
the President, and then it provides, that in the event of
non-payment of such credit of duty within this period, in
addition to the amount of credit of such duty recoverable,
interest at the rate of 24% per annum shall be taken.
Meaning thereby also, that recovery proceedings are to be
initiated, and at best, are to be required to be initiated
within 30 days, which may include issuance and service of
show cause notice, and determination, and in the event of
failure to pay, interest is purported to be payable by the
assessee, but this also does not have the effect of taking
away the requirement of determination. Thus, taken from any
standpoint, it was contended, that the notice of the
authorities below, levying interest, despite the amount
having been deposited, either before determination, or
within the period permitted after determination, cannot
attract the liability of interest at all, and to that
extent, the orders of learned authority below, including
the learned Tribunal, deserve to be set aside.
It was contended, that the learned Tribunal in
Maharaja Ummaid Mills' case was in error, in proceeding
with the assumption, that no determination is envisaged, or
that, the extent of credit that has been taken or utilised,
does not require any determination, and also, for making
payment also, issuance of a communication, or an order,
directing the payment of the credit taken, is not a precondition,
and since the learned authority below, and the
Tribunal, have wrongly ordered the interest to be levied,
the orders are liable to be set aside.
On the other hand, learned counsel for the Revenue
submitted, that notices have been issued, but in the garb
of pendency of the writ petition, the assessees did not
allow the authorities to proceed to make determination. In
that regard various portions of the orders of the
authorities below were read to us, to show, that the
assessees had taken the stand, that there is a stay from
this Court, and therefore, the matter could not be
proceeded with. Thus, since the Department was not allowed
to proceed, the liability of interest cannot be denied or
contested. Then, relying upon the judgment of Hon'ble the
Supreme Court, in Collector of Central Excise Vs. Raghuvar
(India) Ltd. reported in (2000) 5 SCC-299, it was
contended, that action for recovery under Section 57-I, as
it stood prior to 16.10.1988, is not subject to the
limitation period provided under Section 11-A of the
Central Excise Act, and that, even if Section 11A is taken
to be containing provisions of general nature, the
provisions of Modvat Scheme are special ones, and the
latter would therefore govern the scheme. Learned counsel
means, that in the present case, the provisions of Rule 57I,
being a special provision regarding Modvat Scheme, the
general provisions of Central Excise Act, contained in
Section 11A, need not be gone into. Then, it was contended
that from the reading of provisions of Section 112(2)(b),
and comprehending the matter under the scheme of things, it
is clear, that the contemplated adjudication has to be only
qua making arithmetical calculation, but then per force the
provisions of Section 112(2)(b), the liability of interest
would start from the beginning, i.e. on expiry of 30 days
from the date of receipt of assent of the President to the
Finance Act 2000. It was also contended, that under the
scheme of things, by virtue of Section 112, availability of
Modvat credit stood completely denied, notwithstanding any
judgment or order of any court or tribunal, or any
provision in the Rules, and where such credit has been
availed, it was directed to be recovered, and at the same
time, it is provided, that in the event of non-payment of
such credit of duty, within the said period of 30 days, in
addition to the amount of credit of such duty recoverable,
interest at the rate of 24% per annum shall be payable,
from the date immediately after the expiry of the said
period of 30 days, till the date of payment. Thus, since
the Modvat credit availed by the assessee is not in
controversy, may be that the Department was to recover, but
then, in order to avoid liability of interest, the payment
was required to be made by the assessee within a period of
30 days of the Finance Act, 2000 receiving the assent of
the President, otherwise liability of interest is
attracted, from the expiry of said 30 days.
In rejoinder, learned counsels for the petitioners
submitted, that the more important question is, as to
whether in the circumstances of the case, Section 112 at
all applies, inasmuch as the present are not the cases
where either any action has been taken to deny the credit
on any duty, nor there is any judgment or decree rendered
by any court or tribunal, denying, or permitting, such
credit, which may be required to be validated or
invalidated by Section 112, rather notices have been issued
under Rule 57-I, and until and unless determination was
made, consequent upon those notices, after hearing the
assessees, it could not be said, that any amount had
accrued, and since Section 112(2)(b) contemplates an
additional liability of interest, in addition to the amount
of credit of such duty recoverable, until and unless that
amount is determined, no liability of interest can be
attracted. Then, it was also contended that for the
present purposes, the nonobstante clause is only qua the
Rules, and since no benefit was ever drawn, or claimed to
be drawn, by the appellant assessee, and therefore, the
provisions of Section 112(2)(b) also does not apply. It was
also submitted, that during pendency of the writ petitions,
the Department never moved for vacating stay, or for
expediting hearing, and could have very well adjudicated,
consequent upon the notice. It was also contended, that
Section 112(2)(b) is not in the nature of any levy, or
impose liability, rather is in the nature of concession for
the assessee, who has been allowed or disallowed the
credit, and thus the demand of interest is bad.
Learned counsel for the appellants invited our
attention to certain provisions of Central Excise Rules,
Central Excise Act, so also other fiscal statutes, to show,
that where the liability of interest was intended to be
attracted, from any date anterior to the date of
determination of the amount, specific provision in that
regard has been made, and circumstances for attracting such
retrospective liability has been provided, while where such
retrospective liability is not contemplated, the provision
has been made for payment within the specified time of the
raising of demand, and then liability of interest is
attracted, and from this, it was contended, that even from
a collective reading of Rule 57I and Section 112(2)(b), it
is clear, that the liability of interest is not attracted
from any retrospective date. It is maintained rather
reiterated, that it is only sub-section (1) which is
couched with nonobstante clause, while sub-section (2) is
not so couched, with the result, that Rule 57-I does have
its full play.
We have considered the submissions, and have gone
through the records, and various provisions of law.
Before starting with the discussion, we may
gainfully quote the provisions of Rule 57-I, which reads as
under:
“57-I. Recovery of credit wrongly availed of or
utilised in an irregular manner;-(1)(i) Where
credit of duty paid on inputs has been taken on
account of an error, omission or mis-construction,
on the part of an officer or a manufacturer, or an
assessee, the proper officer may, within six
months from the date of filing the return as
required to be submitted in terms of sub-rule (8)
of Rule 57G, and where no such return as aforesaid
is filed, within six months from the last date on
which such return is to be filed under the said
rule, serve notice on the manufacturer or the
assessee who has taken such credit requiring him
to show cause why he should not be disallowed such
credit and where the credit has already been
utilised, why the amount equivalent to such credit
should not be recovered from him.
(ii) Where a manufacturer has taken the credit by
reason of fraud, willful mis-statement, collusion
or suppression of facts, or contravention of any
of the provisions of the Act or the rules made
thereunder with intent to evade payment of duty,
the provisions of clause (i) shall have effect as
if for the words 'six months', the words 'five
years' were substituted.
(iii) The proper officer, after considering the
representation, if any, made by the manufacturer
or the assessee on whom notice is served under
clause (i), shall determine the amount of such
credit to be disallowed (not being in excess of
the amount specified in the show cause notice) and
thereupon such manufacturer or assessee shall pay
the amount equivalent to the credit disallowed, if
the credit has been utilised, or shall not utilise
the credit thus disallowed.
Explanation-Where the service of the notice is
stayed by an order of a court of law, the period
of such stay shall be excluded from computing the
aforesaid period of six months or five years, as
the case may be.
(2) If any inputs in respect of which credit has
been taken are not fully accounted for as having
been disposed off in the manner specified in this
section, the manufacturer shall, upon a written
demand being made by the [Assistant Commissioner
of Central Excise], pay the duty leviable on such
inputs within three months from the date of
receipt of the notice of demand.
(3) Where a manufacturer or an assessee fails to
pay the amount determined under sub-rule (1) or
sub-rule (2) within three months from the date of
receipt of demand notice, he shall pay, in
addition to the amount so determined, interest at
such rate, as may be fixed, by the Central Board
of Excise and Customs under Section 11AA of the
Act, from the date immediately after the expiry of
the said period of three months till the date of
payment.
(4) Where the credit of duty paid on inputs has
been taken wrongly by reason of fraud, wilful misstatement,
collusion or suppression of facts, or
contravention of any of the provisions of the Act,
or the rules made thereunder with intent to evade
payment of duty, the person who is liable to pay
the amount equivalent to the credit disallowed as
determined under clause (iii) of sub-rule (1)
shall also be liable to pay a penalty equal to the
credit so disallowed.
Explanation I-Where the credit disallowed is
reduced by the Commissioner of Central Excise
(Appeals), the Appellate Tribunal or, as the case
may be, a court of law, the penalty shall be
payable on such reduced amount of credit
disallowed.
Explanation II-Where the credit disallowed is
increased or further increased by the Commissioner
of Central Excise (Appeals), the Appellate
Tribunal or, as the case may be, a court of law,
the penalty shall be payable on such increased or
further increased amount of credit disallowed.
(5) Notwithstanding anything contained in clause
(iii) of sub-rule (1) or sub-rule (3) where the
credit of duty paid on inputs has been taken
wrongly on account of fraud, willful misstatement,
collusion, or suppression of facts, or
contravention of any of the provisions of the Act
or the rules made thereunder with intent to evade
payment of duty, the person who is liable to pay
the amount equivalent to the credit disallowed, as
determined under clause (iii) of sub-rule (1),
shall also be liable to pay interest at such rate
as may be fixed by the Board under Section 11AA of
the Act from the first day of the month succeeding
the month in which the credit was wrongly taken,
till the date of payment of such amount.
Explanation I-For the removal of doubts, it is
hereby declared that the provisions of this sub-
rule shall not apply to cases where the credit
disallowed became payable before the 23rd day of
July, 1996.
Explanation II-Where the credit disallowed is
reduced by the Commissioner of Central Excise
(Appeals), the Appellate Tribunal or, as the case
may be, a court of law, the interest shall be
payable on such reduced amount of credit
disallowed.
Explanation III-Where the credit disallowed is
increased, or further increased, by the
Commissioner of Central Excise (Appeals), the
Appellate Tribunal or, as the case may be, a court
of law, the interest shall be payable on such
increased, or further increased, amount of credit
disallowed.”
We need not go into the provisions of Section 11A,
because the scheme of Modvat is covered by the Rules
comprising of Modvat Scheme, these provisions lay down
complete mechanism and procedure, relevant for the present
purposes.
We may at this place again revert to the judgment
of Hon'ble the Supreme Court, in Associated Cement
Companies Ltd.'s case, passed on the review petition. What
we find therein is, that in the original order dt.
28.11.2002, which was passed after commencement of the
Finance Act of 2000, the Modvat credit was held to be
available, and then, when attention was invited to Section
112 of the Finance Act, it was held, that credit is not
available, and then in para-5, it has been held as under:
“5. Though the assessee is not entitled to the
benefit as aforesaid, yet we cannot ignore the
fact that the aforesaid amendment came into force
on 1st April, 2000 when the order of the tribunal
dated 8th September, 1999, in favour of the
assessee was holding the field and it is being set
aside today by this order. In this view, the time
to make payment under Section 112(2)(b) has to
commence only from today..”
We seek sufficient guidance from this judgment,
inasmuch as at least till rendering of this judgment by
this court on 3.4.2002, the present assessees/appellants
were having judgment of the Tribunal in India Cement's
case, and Jindal Polymers's case, and the judgment of the
Tribunal in Associated Cement Companies Ltd.'s case as well
in their favour, and as such the appellant can be said to
have stood well advised in challenging the contemplated
action of the Department, by filing litigations.
It always rests in the realm of uncertainty as to
whether the stand taken by the person approaching the Court
would be accepted by the court, or not, but the fact does
remain, that the above circumstances do show, that it
cannot be said, that the assessees had simply initiated
litigation before this Court to only stall the action of
the Department, rather they earnestly and bonafidely
believed, that they are entitled to avail the credit. It
appears, that finding prima facie force in the stand of the
assessee, this Court granted interim orders. It is also
significant to note, that it was during pendency of those
writ petitions, that probably in view of the judgments
rendered by the learned Tribunals in different cases, that
the Finance Act, 2000 was enacted, incorporating Section
112, to validate the denial of credit, but then, the
constitutional validity of that section was challenged
before this Court by making appropriate amendment, with
appropriate leave of the Court, and thus the matter did
remain pending before this Court, obviously therefore, till
the constitutional validity of the legislation was upheld
by this Court, no fault can be found with the assessees, in
not paying the amount of credit availed by them. May be, in
view of good sense prevailing on the authorities of the
Department, or may be rightly respecting the interim orders
of this Court passed in different writ petitions, the
authorities did not proceed with the making adjudication of
the demand, consequent upon the notice issued under Rule
57I, but then the fact does remain, that the notices were
kept alive, and it was only after the judgment was rendered
by this Court on 3.4.2002, that the proceedings were
proceeded ahead, and orders of adjudication were made.
Thus, this does show that even the respondents within
themselves were of the view, all through, that for raising
a demand under Section 257-I is a sine qua non.
We may examine the matter from other stand point
also viz. that if that were not so, and if the things were
as are sought to be contended before us, and as held by the
learned Tribunal, that the extent of credit question more
or less does not require adjudication by the central excise
officers, or that no determination is even envisaged under
Section 112(2)(b), or that for making payment, even
issuance of communication or an order directing the payment
of the credit taken is not a pre-condition, then at least
the Department would have given up the notice originally
issued under Rule 57-I, and would have straightway
addressed communication to the assessees, at least
immediately after the judgment was rendered by this Court
on 3.4.2002, calling them upon to make payment of the
credit availed, immediately, and then probably might have
laid claim for interest after the expiry of period of 30
days from the date on which the Finance Act, 2000 received
assent of the President, but as noticed above, this is not
the fact situation, and therefore, we find, that the
learned Tribunal was labouring under basic misconception
even from the standpoint, what the Department itself was
considering.
Likewise, with the enactment of Finance Act, 2000
itself, the respondents could very well have straightway
issued demand notice to the assessees, calling them upon to
make payment of the amount of credit availed by them
immediately, or even within a period of 30 days from the
date. In which event the liability of interest could have
accrued, but admittedly that has also not been done.
Then, apart from the Department's own feeling, or
contemplation, or considerations, in our view also, even a
reading of the provisions of Section 112 does show, that
according to sub-section (1), by nonobstante clause, it
only provides for disallowance of credit. Then, sub-section
(2) only validates the action taken to deny the credit, and
invalidates any action taken or order passed allowing the
credit, and then clause (b) of sub-section (2) only directs
that recovery shall be made of all the credit of duty, and
significantly, this clause, in any case, does not proceed
with any nonobstante clause like “notwithstanding anything
contained in the Central Excise Act, or the Central Excise
Rules, recovery shall be made of all the credit of duty,
which have been taken or utilised, but which would not have
been allowed to be taken or utilised, if the provisions of
sub-section (1) had been in force at all material times”.
If that were the language of clause (b), probably it could
be canvassed, that in view of the nonobstante clause even
the requirement of Rule 57-I, or for that matter even of
Section 11A are not attracted.
Then, even if the two provisions being Section 112
(2)(b) and Rule 57-I are read together, we do not find even
any conflict to be there in between the two provisions, to
accept the contention of the Revenue, that there being a
conflict, the provisions of Finance Act, being basic
statute, and provisions of Rule 57-I being of subordinate
legislation, the provisions of Section 112 would prevail.
In our view, Section 112(2)(b) only permits that recovery
shall be made. Then, it does neither lay down any mechanism
for effecting recovery, nor does it eliminate the invoking
the mechanism existing under the Rules for effecting
recovery. Obviously therefore, the two provisions have to
be read together, and to be construed harmoniously, and the
obvious result would be, that the recovery is to be
effected in accordance with the provisions of the Rules.
If the recovery is to be so made in accordance
with the Rules, being Rule 57-I, the liability of interest
starts from the expiry of specified period after the demand
notice is served. In this regard, may be, that there is
some conflict between the provisions of Section 112(2)(b)
and Rule 57-I, but then, for that purpose, we may take the
provisions of Section 112(2)(b) to provide a period of 30
days instead of 90 days, as provided in Rule 57-I, but
then, starting point of computation of interest liability,
in our view, can possibly not be from the date as held by
the learned authorities below. In that regard, we stand
sufficiently guided from the judgment of Hon'ble the
Supreme Court in Associated Cement Companies Ltd.'s case,
wherein after considering the provisions of Section 112(2)
(b), Hon'ble the Supreme Court held, that till that date
the assessee was having in his favour the order which was
holding the field, and the liability of interest is being
attracted after the order was set aside, and therefore
held, that period of 30 days time to make payment under
Section 112(2)(b) is to commence from today.
In our view, respecting the letter and spirit of
judgment of Hon'ble the Supreme Court, more so in spirit of
Article 141, the earliest point of time from which the time
for making payment under Section 112(2)(b) can be said to
commence is, only from the date the adjudication was made
by the order passed in original authority issuing notice.
And therefore, we are of the view, that if the payment is
not made within a period of 30 days from the date of the
order in original, the liability of payment of interest
under Section 112(2)(b) would arise from the date of expiry
of 30 days from the date of order in original, and
liability cannot be attracted from any anterior point of
time.
It is also significant to note, that the order of
the original authority is dated 29.4.2002, by order dt.
19.2.2003 the Commissioner had exercised his powers under
Section 35E(2), and had directed the Assistant Commissioner
to file appeals before the Commissioner for challenging the
order in original, and lay claim for interest. It is during
this interregnum period, that as noticed above, the appeal
filed by the commissioner in Associated Cement's case was
dismissed by Hon'ble the Supreme Court on 28.11.2002,
upholding entitlement to MODVAT credit, and against that
order review petition was filed in the year 2003, which was
allowed on 8.12.2004. This does indicate, that till passing
of the order dt. 28.11.2002, or in any case till passing of
the judgment by this Court dt. 3.4.2002, the Department was
also not of the view, that these consequences have to flow,
attracting leviability of interest, to commence since the
expiry of 30 days from the date of Finance Act, 2000
receiving assent of the President. It is an afterthought
stage, that on a second thought, the controversy has been
triggered off. Though this may not be a sole or even
material ground for negativing the claim of interest by the
revenue, however this is being mentioned, only as a fact
throwing some light on the fact situation.
Much was sought to be argued on the aspect of
provisions of Section 112(2)(b) being a colourable exercise
of power on the part of the Department, and having been
enacted with a view to penalise the appellants, who had
availed their fundamental right of constitutional remedies,
by approaching this Court. But then, in our view, we are
not inclined to entertain the submission at this stage,
because vide judgment dt. 3.4.2002 the enactment has been
found to be intra-vires. May be that in that judgment this
specific aspect of Section 112(2)(b) may not have been
canvassed, but then, the fact remains, that the legislation
has been found to be intra-vires, and the fact also does
remain, that the judgment dt. 3.4.2002 is already subject
matter of appeal before Hon'ble the Supreme Court.
Therefore, it is always open to the appellants to raise
these contentions before Hon'ble the Supreme Court, if they
so stand advised, and if the Hon'ble Supreme Court so
permits to the appellants.
In our view, in view of the above discussion, the
question as framed is required to be answered in the
manner, that the learned Tribunal was not right in coming
to the conclusion, that under Section 112(2)(b) of the
Finance Act, interest can be levied, even where there is no
adjudication of the show cause notices, which were pending
decision, at the time of commencement of the aforesaid
provisions, rather liability of interest can be attracted
to commence, from expiry of 30 days from the date of making
of determination.
In view of the above, the other question about the
liability of interest uptill 25.10.2000, or 28.10.2000 need
not be gone into by us.
The appeals are accordingly allowed in the manner
that no liability of interest will be attracted on the
amount of Modvat credit availed, before expiry of 30 days
from the date of determination, made by the order in
original, passed pursuant to the notice given by the
authorities concerned, under Rule 57-I.
( DEO NARAYAN THANVI ),J. ( N P GUPTA ),J.
/sushil/
(1) CENTR.EXCISE APPEAL No. 2 of 2005
SHREE RAJASTHAN TEXCHEM LTD
V/S
UNION OF INDIA & ORS
(2) CENTR.EXCISE APPEAL No. 2 of 2003
SHREE CEMENT LTD
V/S
UNION OF INDIA & ORS
(3) CENTR.EXCISE APPEAL No. 3 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(4) CENTR.EXCISE APPEAL No. 4 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(5) CENTR.EXCISE APPEAL No. 5 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(6) CENTR.EXCISE APPEAL No. 6 of 2003
M/S MAHARAJA SHREE UMAID MILLS LTD
V/S
UNION OF INDIA & ORS
(7) CENTR.EXCISE APPEAL No. 14 of 2004
SHREE SHYAM FILAMENTS
V/S
UNION OF INDIA & ORS
(8) (8)
M/S LAKSHMI CEMENTV/SUNION OF INDIA & ORS
(9) CENTR.EXCISE APPEAL No. 1 of 2005
SHREE RAJASTHAN SYNTEX LTD
V/SUNION OF INDIA & ORS
(10) CENTR.EXCISE APPEAL No. 7 of 2005
RAJASTHAN PETRO SYNTHETCS LTD
V/SUNION OF INDIA & ORS
Mr. Dinesh Mehta, Mr. Vikas Balia, Mr. Ramit Mehta &
Mr. Avinash Acharya for the appellants.
Mr. Rishabh Sancheti & Mr. V.K. Mathur, for the
respondents.
Date of Order : 26.3.2008
HON'BLE SHRI N P GUPTA,J.
HON'BLE SHRI DEO NARAYAN THANVI,J.
ORDER
(Per Hon'ble Gupta, J.)
This bunch of appeals involve common question of
law, being as under:
“Whether in the facts and circumstances of
the case, the Tribunal was right in coming to
the conclusion that under Section 112(2)(b)
of the Finance Act, 2000 interest can be
levied even without there being adjudication
of show cause notice, which are pending
decision at the time of commencement of the
aforesaid provision?”
It may just by the way be mentioned, that in four
appeals, being no.6/03, 5/03, 4/03 and 3/03 one additional
question is also involved, and framed, being as to whether
interest could be levied if at all only uptill 25.10.2000,
the date on which the cheque was presented in the Bank.
The facts in all the matters are almost common,
except the final product manufactured by the different
appellants in different appeals.
We think it appropriate to give brief resume of
the facts giving rise to the present controversy.
On different dates, notices were issued by the
competent authority, calling upon the assessees to show
cause as to why the amounts mentioned in the notice
representing Modvat credit, availed by them on HSD oil, be
not recovered, as the Modvat credit is not available to
them. It is at this stage, that various petitioners filed
writ petitions before this Court, challenging the very
jurisdiction of the authority to initiate the proceedings,
and for that purpose the assessee relied upon certain
judgments of the Tribunal, rendered in the case of India
Cements Ltd. Vs. CC & CE, Hyderabad reported in 1997(95)
ELT-520, and Jindal Polymers Vs. Commissioner of Central
Excise Indore reported in 1999(114) ELT-322, wherein the
learned Tribunal had taken the view, that the Modvat credit
is available on the HSD oil to the assessee. In those writ
petitions, notices were issued, and interim stay were
granted. The writ petitions were filed during the period
1997 to 1999. It was during pendency of these writ
petitions, that the Finance Act, 2000 came to be passed,
which received the assent of the President on 12.5.2000.
Section 112 whereof reads as under:
“112. Validation of the denial of credit of duty
paid on high speed diesel oil.-(1) Notwithstanding
anything contained in any rule of the Central
Excise Rules, 1944, no credit of any duty paid on
high speed diesel oil at any time during the
period commencing on and from the 16th day of
March, 1995 and ending with the day, the Finance
Act, 2000 receives the assent of the President,
shall be deemed to be admissible.
(2) Any action taken or anything done or purported
to have been taken or done at any time during the
said period under the Central Excise Act or any
rules made thereunder to deny the credit of any
duty in respect of high speed diesel oil, and also
to disallow such credit to be utilised for payment
of any kind of duty on any excisable goods shall
be deemed to be, and to always have been, for all
purposes, as validly and effectively taken or
done, as if the provisions of sub-section (1) had
been in force at all material times and,
accordingly, notwithstanding anything contained in
any judgment, decree or order of any court,
tribunal or other authority;
(a) no suit or other proceedings shall be
maintained or continued in any court, tribunal or
other authority for allowing the credit of the
duty paid on high speed diesel oil and no
enforcement shall be made by any court, tribunal
or other authority of any decree or order allowing
such credit of duty as if the provisions of subsection
(1) had been in force at all material
times;
(b) (b) f
duty, which have been taken or utilised but which
would not have been allowed to be taken or
utilised, if the provisions of sub-section (1) had
been in force at all material times, within a
period of thirty days from the date on which the
Finance Act, 2000 receives the assent of the
President and in the event of non-payment of such
credit of duty within this period, in addition to
the amount of credit of such duty recoverable,
interest at the rate of twenty four per cent, per
annum shall be payable, from the date immediately
after the expiry of the said period of thirty days
till the date of payment.
Explanation.-For the removal of doubts, it is
hereby declared that no act or omission on the
part of any person shall be punishable as an
offence which would not have been so punishable if
this section had not come into force.”
On passing of this Finance Bill, these writ
petitions were amended, and the provisions of the Finance
Act were challenged being ultravires to the Constitution.
Of course, those amendment applications were allowed, and
the bunch of the writ petitions was ultimately decided by
the Division Bench, vide judgment dt. 3.4.2002, holding the
validation Act to be intra-vires, and dismissing the writ
petitions, finding no merits therein.
It may also be mentioned at this stage, that one
matter, being in Commissioner of Central Excise, Hyderabad
Vs. Associated Cement Companies Ltd. Mancherial, reported
in (2003) 9 SCC-74, came to be decided by Hon’ble the
Supreme Court, and therein a view was taken, that the
Tribunal was justified in arriving at the conclusion, that
the assessee was entitled to get the benefit of
notification till Rule 57-B is amended, and the appeal was
dismissed. Then, it was held that the assessee was entitled
to Modvat credit. However, a review petition was filed,
which was allowed, vide judgment dated 8.11.2004, reported
in 2005(180) ELT-3, wherein it was found, that
inadvertently attention of the Court was not drawn to
provisions of Section 112 of Finance Act, 2000. Then, the
provisions were quoted, and it was found, that sub-section
(1) of Section 112 shows, that no credit is admissible on
any duty paid on high speed diesel oil at any time during
the period commencing on and from the 16.3.1995 and ending
with the day the Finance Act, 2000 received the assent of
the President, which was given on 1.4.2000. It was noticed,
that the period in question comes under the purview of
Section 112(1), and it was held, that since the aforesaid
provision provides that notwithstanding anything contained
in Rules, the credit is not admissible, the assessee was
not entitled to get the benefit of Rule 57B. Then in para-5
it was held, that though the assessee is not entitled to
the benefit as aforesaid, yet we cannot ignore the fact,
that the aforesaid amendment came into force on 1.4.2000,
when the order of the tribunal dated 8.9.1999, in favour of
the assessee, was holding the field, and it is being set
aside today by this order. In this view, the time to make
payment under Section 112(2)(b) has to commence only from
today. The constitutional validity of Section 112 of the
Finance Act was attempted to be raised, but was not
permitted in that appeal, and was left open.
It is in these facts, that soon after passing of
the judgment by this Court on 3.4.2002, the notices issued
and the various issues were carried to logical conclusion,
obviously in the light of the provisions of Section 112,
and it was held, that Modvat credit is not available, and
the assessee has wrongly taken the credit, of the specified
amount in each case, during the period concerned. Then, in
some cases it was found, that the assessee had already
deposited the amount, which was ordered to be appropriated
to the Government account, and imposition of penalty was
denied, while in some cases disallowing credit of the duty
in specified amount, demand of the said amount was
confirmed, and the assessee was directed to deposit the
amount in the appropriate account, as the case may be.
The fact does remain, that the notice initially
issued, obviously under Rule 57-I, were carried to logical
conclusion, after the decision was rendered by this Court
on 3.4.2002, obviously because, during the interregnum
period there were interim stay by this Court.
Then, the orders of the original authority were
challenged by the Department in appeal, and the learned
Appellate Authority allowed the appeal, and held, that the
present appellants are liable to pay interest @ 24% p.a.
from 12.6.2000 till the date of payment, in view of the
provisions of Section 112. It was also found, that the
adjudicating authority issued notice to the assessee,
incorporating the liability of interest with the demand in
the impugned notice.
Appeals against these orders were filed before
the learned Tribunal, and the appeals of one of the
assessee, being M/s. Maharaja Shree Umaid Mills Ltd.
(Appeal No. E/45-48/2003/NB/C and Appeal No.
E/263/2003/NB/C did come to be decided by the learned
Tribunal vide judgment dt. 1.10.2003, holding, that the
extent of credit that has been taken or utilised, does not
require any determination by the Central Excise Officers,
and that, in the instant case no such determination is even
envisaged, as Section 112(2)(b) is very categoric in its
terms, and it says “recovery shall be made of all the
credit which have been taken or utilised but which would
not have been allowed to be taken or utilised, if the
provisions of Sub-section (1) had been in force at all
material times”. Thus, if any credit of duty paid on HSD
had been taken, the same was liable to be recovered, and
the provision contains a clear mandate to the persons, who
have taken such credit, to make payment, as well as to the
Departmental authorities to effect recoveries, and that for
making payment also, issuance of a communication, or an
order directing the payment of the credit taken, is not a
pre-condition. This is the judgment reported in 2003 (158)
ELT-734, and is under challenge before us in Appeals Nos.
6/03, 5/03, 4/03 and 3/03. Then, the orders were passed by
the learned Tribunal, following the judgment in Maharaja
Shree Umaid Mills's case, in other matters also.
This is how challenging these orders, all these
appeals filed by the appellants are before us, and have
been admitted on the substantial questions of law as
noticed above.
Arguing the appeals it was contended, that the
interest is recoverable, or is to be recovered, in addition
to the amount of credit, on such duty, and that, the main
nonobstante clause is attached to sub-section (1) only, and
sub-section (2) is not enacted with any such nonobstante
clause. Obviously, since the recovery is to be made with
interest, till the action for recovery is taken, no
liability for interest can be levied. Then, referring to
provisions of Section 11A, and Rule 57-I, it was contended,
that before effecting any recovery, notice is required to
be served to show cause as to why such credit should not be
disallowed, and where the credit has already been utilised,
the amount to be not utilised by him, and then,
determination of amount of which credit is disallowed, is
to be made, whereupon assessee is to make payment of the
amount equivalent to the credit disallowed, and the payment
of such amount determined, is to be made within three
months from the date of demand notice, and in addition to
the amount so determined, interest, at such rate, as may be
fixed by the Central Board of Excise and Customs under
Section 11AA of the Act, from the date immediately after
the expiry of the said period of three months till the date
of payment, is also payable, and that, in all the present
cases, such notice to show cause had already been served
upon them, at a point of time when the provisions of
Section 112 were not on the Statute Book, but then, those
notices have to be carried to their logical conclusion, and
determination is to be made, demand notice is to be issued,
payment can be made within the permissible time period
thereafter, and the liability of interest arises only from
the date after expiry of such permissible period of time.
Referring to the judgment of original authority,
in Maharaja Shree Umed Mills's case, it was contended, that
in those cases amount was deposited in October, 2000, but
the amount could not be appropriated before the
adjudication, and it was by the order of the original
authority only, that amount has been ordered to be
appropriated in Government account. It is also contended,
that the Act, or the Rules, does not contain any provision
for assessee's entitlement to interest, in case, on
adjudication it is found, that any excess amount has been
paid by the assessee, obviously therefore, and as a
necessary corollary, no liability of interest could be
attracted against the assessee also, before adjudication.
Then, the next submission made was, that a bare
reading of provisions of Section 112, even as they are,
obviously because by the judgment dt. 3.4.2002 it has been
held to be intra-vires, and may be that the judgment dt.
3.4.2002 is already under appeal before Hon'ble the Supreme
Court, and therefore, taking the provisions of Section 112
on the face value, even notwithstanding the incorporation
of nonobstante clause, it does not even contemplate absence
of any adjudication, much less does it even purport, to do
away with the requirement of adjudication. Reliance in this
regard was placed on two judgments of the Tribunal, in the
cases of Poddar Pigments Ltd. Vs. Commissioner of Central
Excise, Jaipur reported in 2003(155) E.L.T. 484, and L.M.L.
Ltd. Vs. Commissioner of Central Excise reported in 2003
(162) E.L.T. -718. It was then submitted, that the
validation Act, being Section 112, covers only the
specified period, from 16.3.1995 upto the period ending
with the day the Finance Act 2000 received the assent of
the President, and the adjudication is necessary, also
because, there may be circumstances, like, the assessee may
be company which may have gone in liquidation, and assets
may have been taken over by the Official Liquidator after
the secured creditors may have realised their dues by
remaining outside the liquidation, and then the question
may arise about the priority of the charge of the
Government revenue, even qua the secured creditors,
obviously for that purpose, the determination of the
amount, and determination of the priority, has to be
considered and made, and therefore, making of
determination, according to Section 11A, or Rule 57I, is a
sine qua non. Then, by reading Section 112 again and again
it was contended, that all that is contemplated by subsection
(1) is, that notwithstanding anything contained in
any rule of the Central Excise Rules, 1944, no credit of
any duty paid on high speed diesel oil at any time during
the relevant period shall be deemed to be admissible.
According to learned counsel, this only means, that this
creates a fiction, that for the purpose of Rule 57-I, it
would mean, that the credit on duty of inputs has been
taken on account of an error, omission or misconception,
and means nothing more. Then, reading sub-section (2) it
was contended, that all that it contemplates is, that any
action taken, or anything done, or purported to have been
taken or done, at any time during the said period under the
Central Excise Act or any rules made thereunder, to deny
the credit of any duty in respect of high speed diesel oil,
and also to disallow such credit to be utilised for payment
of any kind of duty on any excisable goods shall be deemed
to be, and to always have been, for all purposes, as
validly and effectively taken or done, as if the provisions
of sub-section (1) had been in force at all material times,
and accordingly, notwithstanding anything contained in any
judgment, decree or order of any court, tribunal or other
authority, which according to the learned counsel only
means, that if any action has been taken for denying the
credit, that is validated, and if any order is passed
permitting the credit, still the credit will stand denied
obviously, therefore, action is to be taken for recovery of
the amount of credit taken, and again, obviously, by taking
appropriate proceedings, in accordance with law. Then,
submitting on clause (b), which is precise bone of
contention, of sub-section(2), it was contended, that all
that it permits is that, or provides that, recovery shall
be made of all the credit of duty, which have been taken or
utilised, but which would not have been allowed to be taken
or utilised, if the provisions of sub-section (1) had been
in force at all times, and then after putting a comma, it
is provided, that action is to be taken within 30 days from
the date on which the Finance Act receives the assent of
the President, and then it provides, that in the event of
non-payment of such credit of duty within this period, in
addition to the amount of credit of such duty recoverable,
interest at the rate of 24% per annum shall be taken.
Meaning thereby also, that recovery proceedings are to be
initiated, and at best, are to be required to be initiated
within 30 days, which may include issuance and service of
show cause notice, and determination, and in the event of
failure to pay, interest is purported to be payable by the
assessee, but this also does not have the effect of taking
away the requirement of determination. Thus, taken from any
standpoint, it was contended, that the notice of the
authorities below, levying interest, despite the amount
having been deposited, either before determination, or
within the period permitted after determination, cannot
attract the liability of interest at all, and to that
extent, the orders of learned authority below, including
the learned Tribunal, deserve to be set aside.
It was contended, that the learned Tribunal in
Maharaja Ummaid Mills' case was in error, in proceeding
with the assumption, that no determination is envisaged, or
that, the extent of credit that has been taken or utilised,
does not require any determination, and also, for making
payment also, issuance of a communication, or an order,
directing the payment of the credit taken, is not a precondition,
and since the learned authority below, and the
Tribunal, have wrongly ordered the interest to be levied,
the orders are liable to be set aside.
On the other hand, learned counsel for the Revenue
submitted, that notices have been issued, but in the garb
of pendency of the writ petition, the assessees did not
allow the authorities to proceed to make determination. In
that regard various portions of the orders of the
authorities below were read to us, to show, that the
assessees had taken the stand, that there is a stay from
this Court, and therefore, the matter could not be
proceeded with. Thus, since the Department was not allowed
to proceed, the liability of interest cannot be denied or
contested. Then, relying upon the judgment of Hon'ble the
Supreme Court, in Collector of Central Excise Vs. Raghuvar
(India) Ltd. reported in (2000) 5 SCC-299, it was
contended, that action for recovery under Section 57-I, as
it stood prior to 16.10.1988, is not subject to the
limitation period provided under Section 11-A of the
Central Excise Act, and that, even if Section 11A is taken
to be containing provisions of general nature, the
provisions of Modvat Scheme are special ones, and the
latter would therefore govern the scheme. Learned counsel
means, that in the present case, the provisions of Rule 57I,
being a special provision regarding Modvat Scheme, the
general provisions of Central Excise Act, contained in
Section 11A, need not be gone into. Then, it was contended
that from the reading of provisions of Section 112(2)(b),
and comprehending the matter under the scheme of things, it
is clear, that the contemplated adjudication has to be only
qua making arithmetical calculation, but then per force the
provisions of Section 112(2)(b), the liability of interest
would start from the beginning, i.e. on expiry of 30 days
from the date of receipt of assent of the President to the
Finance Act 2000. It was also contended, that under the
scheme of things, by virtue of Section 112, availability of
Modvat credit stood completely denied, notwithstanding any
judgment or order of any court or tribunal, or any
provision in the Rules, and where such credit has been
availed, it was directed to be recovered, and at the same
time, it is provided, that in the event of non-payment of
such credit of duty, within the said period of 30 days, in
addition to the amount of credit of such duty recoverable,
interest at the rate of 24% per annum shall be payable,
from the date immediately after the expiry of the said
period of 30 days, till the date of payment. Thus, since
the Modvat credit availed by the assessee is not in
controversy, may be that the Department was to recover, but
then, in order to avoid liability of interest, the payment
was required to be made by the assessee within a period of
30 days of the Finance Act, 2000 receiving the assent of
the President, otherwise liability of interest is
attracted, from the expiry of said 30 days.
In rejoinder, learned counsels for the petitioners
submitted, that the more important question is, as to
whether in the circumstances of the case, Section 112 at
all applies, inasmuch as the present are not the cases
where either any action has been taken to deny the credit
on any duty, nor there is any judgment or decree rendered
by any court or tribunal, denying, or permitting, such
credit, which may be required to be validated or
invalidated by Section 112, rather notices have been issued
under Rule 57-I, and until and unless determination was
made, consequent upon those notices, after hearing the
assessees, it could not be said, that any amount had
accrued, and since Section 112(2)(b) contemplates an
additional liability of interest, in addition to the amount
of credit of such duty recoverable, until and unless that
amount is determined, no liability of interest can be
attracted. Then, it was also contended that for the
present purposes, the nonobstante clause is only qua the
Rules, and since no benefit was ever drawn, or claimed to
be drawn, by the appellant assessee, and therefore, the
provisions of Section 112(2)(b) also does not apply. It was
also submitted, that during pendency of the writ petitions,
the Department never moved for vacating stay, or for
expediting hearing, and could have very well adjudicated,
consequent upon the notice. It was also contended, that
Section 112(2)(b) is not in the nature of any levy, or
impose liability, rather is in the nature of concession for
the assessee, who has been allowed or disallowed the
credit, and thus the demand of interest is bad.
Learned counsel for the appellants invited our
attention to certain provisions of Central Excise Rules,
Central Excise Act, so also other fiscal statutes, to show,
that where the liability of interest was intended to be
attracted, from any date anterior to the date of
determination of the amount, specific provision in that
regard has been made, and circumstances for attracting such
retrospective liability has been provided, while where such
retrospective liability is not contemplated, the provision
has been made for payment within the specified time of the
raising of demand, and then liability of interest is
attracted, and from this, it was contended, that even from
a collective reading of Rule 57I and Section 112(2)(b), it
is clear, that the liability of interest is not attracted
from any retrospective date. It is maintained rather
reiterated, that it is only sub-section (1) which is
couched with nonobstante clause, while sub-section (2) is
not so couched, with the result, that Rule 57-I does have
its full play.
We have considered the submissions, and have gone
through the records, and various provisions of law.
Before starting with the discussion, we may
gainfully quote the provisions of Rule 57-I, which reads as
under:
“57-I. Recovery of credit wrongly availed of or
utilised in an irregular manner;-(1)(i) Where
credit of duty paid on inputs has been taken on
account of an error, omission or mis-construction,
on the part of an officer or a manufacturer, or an
assessee, the proper officer may, within six
months from the date of filing the return as
required to be submitted in terms of sub-rule (8)
of Rule 57G, and where no such return as aforesaid
is filed, within six months from the last date on
which such return is to be filed under the said
rule, serve notice on the manufacturer or the
assessee who has taken such credit requiring him
to show cause why he should not be disallowed such
credit and where the credit has already been
utilised, why the amount equivalent to such credit
should not be recovered from him.
(ii) Where a manufacturer has taken the credit by
reason of fraud, willful mis-statement, collusion
or suppression of facts, or contravention of any
of the provisions of the Act or the rules made
thereunder with intent to evade payment of duty,
the provisions of clause (i) shall have effect as
if for the words 'six months', the words 'five
years' were substituted.
(iii) The proper officer, after considering the
representation, if any, made by the manufacturer
or the assessee on whom notice is served under
clause (i), shall determine the amount of such
credit to be disallowed (not being in excess of
the amount specified in the show cause notice) and
thereupon such manufacturer or assessee shall pay
the amount equivalent to the credit disallowed, if
the credit has been utilised, or shall not utilise
the credit thus disallowed.
Explanation-Where the service of the notice is
stayed by an order of a court of law, the period
of such stay shall be excluded from computing the
aforesaid period of six months or five years, as
the case may be.
(2) If any inputs in respect of which credit has
been taken are not fully accounted for as having
been disposed off in the manner specified in this
section, the manufacturer shall, upon a written
demand being made by the [Assistant Commissioner
of Central Excise], pay the duty leviable on such
inputs within three months from the date of
receipt of the notice of demand.
(3) Where a manufacturer or an assessee fails to
pay the amount determined under sub-rule (1) or
sub-rule (2) within three months from the date of
receipt of demand notice, he shall pay, in
addition to the amount so determined, interest at
such rate, as may be fixed, by the Central Board
of Excise and Customs under Section 11AA of the
Act, from the date immediately after the expiry of
the said period of three months till the date of
payment.
(4) Where the credit of duty paid on inputs has
been taken wrongly by reason of fraud, wilful misstatement,
collusion or suppression of facts, or
contravention of any of the provisions of the Act,
or the rules made thereunder with intent to evade
payment of duty, the person who is liable to pay
the amount equivalent to the credit disallowed as
determined under clause (iii) of sub-rule (1)
shall also be liable to pay a penalty equal to the
credit so disallowed.
Explanation I-Where the credit disallowed is
reduced by the Commissioner of Central Excise
(Appeals), the Appellate Tribunal or, as the case
may be, a court of law, the penalty shall be
payable on such reduced amount of credit
disallowed.
Explanation II-Where the credit disallowed is
increased or further increased by the Commissioner
of Central Excise (Appeals), the Appellate
Tribunal or, as the case may be, a court of law,
the penalty shall be payable on such increased or
further increased amount of credit disallowed.
(5) Notwithstanding anything contained in clause
(iii) of sub-rule (1) or sub-rule (3) where the
credit of duty paid on inputs has been taken
wrongly on account of fraud, willful misstatement,
collusion, or suppression of facts, or
contravention of any of the provisions of the Act
or the rules made thereunder with intent to evade
payment of duty, the person who is liable to pay
the amount equivalent to the credit disallowed, as
determined under clause (iii) of sub-rule (1),
shall also be liable to pay interest at such rate
as may be fixed by the Board under Section 11AA of
the Act from the first day of the month succeeding
the month in which the credit was wrongly taken,
till the date of payment of such amount.
Explanation I-For the removal of doubts, it is
hereby declared that the provisions of this sub-
rule shall not apply to cases where the credit
disallowed became payable before the 23rd day of
July, 1996.
Explanation II-Where the credit disallowed is
reduced by the Commissioner of Central Excise
(Appeals), the Appellate Tribunal or, as the case
may be, a court of law, the interest shall be
payable on such reduced amount of credit
disallowed.
Explanation III-Where the credit disallowed is
increased, or further increased, by the
Commissioner of Central Excise (Appeals), the
Appellate Tribunal or, as the case may be, a court
of law, the interest shall be payable on such
increased, or further increased, amount of credit
disallowed.”
We need not go into the provisions of Section 11A,
because the scheme of Modvat is covered by the Rules
comprising of Modvat Scheme, these provisions lay down
complete mechanism and procedure, relevant for the present
purposes.
We may at this place again revert to the judgment
of Hon'ble the Supreme Court, in Associated Cement
Companies Ltd.'s case, passed on the review petition. What
we find therein is, that in the original order dt.
28.11.2002, which was passed after commencement of the
Finance Act of 2000, the Modvat credit was held to be
available, and then, when attention was invited to Section
112 of the Finance Act, it was held, that credit is not
available, and then in para-5, it has been held as under:
“5. Though the assessee is not entitled to the
benefit as aforesaid, yet we cannot ignore the
fact that the aforesaid amendment came into force
on 1st April, 2000 when the order of the tribunal
dated 8th September, 1999, in favour of the
assessee was holding the field and it is being set
aside today by this order. In this view, the time
to make payment under Section 112(2)(b) has to
commence only from today..”
We seek sufficient guidance from this judgment,
inasmuch as at least till rendering of this judgment by
this court on 3.4.2002, the present assessees/appellants
were having judgment of the Tribunal in India Cement's
case, and Jindal Polymers's case, and the judgment of the
Tribunal in Associated Cement Companies Ltd.'s case as well
in their favour, and as such the appellant can be said to
have stood well advised in challenging the contemplated
action of the Department, by filing litigations.
It always rests in the realm of uncertainty as to
whether the stand taken by the person approaching the Court
would be accepted by the court, or not, but the fact does
remain, that the above circumstances do show, that it
cannot be said, that the assessees had simply initiated
litigation before this Court to only stall the action of
the Department, rather they earnestly and bonafidely
believed, that they are entitled to avail the credit. It
appears, that finding prima facie force in the stand of the
assessee, this Court granted interim orders. It is also
significant to note, that it was during pendency of those
writ petitions, that probably in view of the judgments
rendered by the learned Tribunals in different cases, that
the Finance Act, 2000 was enacted, incorporating Section
112, to validate the denial of credit, but then, the
constitutional validity of that section was challenged
before this Court by making appropriate amendment, with
appropriate leave of the Court, and thus the matter did
remain pending before this Court, obviously therefore, till
the constitutional validity of the legislation was upheld
by this Court, no fault can be found with the assessees, in
not paying the amount of credit availed by them. May be, in
view of good sense prevailing on the authorities of the
Department, or may be rightly respecting the interim orders
of this Court passed in different writ petitions, the
authorities did not proceed with the making adjudication of
the demand, consequent upon the notice issued under Rule
57I, but then the fact does remain, that the notices were
kept alive, and it was only after the judgment was rendered
by this Court on 3.4.2002, that the proceedings were
proceeded ahead, and orders of adjudication were made.
Thus, this does show that even the respondents within
themselves were of the view, all through, that for raising
a demand under Section 257-I is a sine qua non.
We may examine the matter from other stand point
also viz. that if that were not so, and if the things were
as are sought to be contended before us, and as held by the
learned Tribunal, that the extent of credit question more
or less does not require adjudication by the central excise
officers, or that no determination is even envisaged under
Section 112(2)(b), or that for making payment, even
issuance of communication or an order directing the payment
of the credit taken is not a pre-condition, then at least
the Department would have given up the notice originally
issued under Rule 57-I, and would have straightway
addressed communication to the assessees, at least
immediately after the judgment was rendered by this Court
on 3.4.2002, calling them upon to make payment of the
credit availed, immediately, and then probably might have
laid claim for interest after the expiry of period of 30
days from the date on which the Finance Act, 2000 received
assent of the President, but as noticed above, this is not
the fact situation, and therefore, we find, that the
learned Tribunal was labouring under basic misconception
even from the standpoint, what the Department itself was
considering.
Likewise, with the enactment of Finance Act, 2000
itself, the respondents could very well have straightway
issued demand notice to the assessees, calling them upon to
make payment of the amount of credit availed by them
immediately, or even within a period of 30 days from the
date. In which event the liability of interest could have
accrued, but admittedly that has also not been done.
Then, apart from the Department's own feeling, or
contemplation, or considerations, in our view also, even a
reading of the provisions of Section 112 does show, that
according to sub-section (1), by nonobstante clause, it
only provides for disallowance of credit. Then, sub-section
(2) only validates the action taken to deny the credit, and
invalidates any action taken or order passed allowing the
credit, and then clause (b) of sub-section (2) only directs
that recovery shall be made of all the credit of duty, and
significantly, this clause, in any case, does not proceed
with any nonobstante clause like “notwithstanding anything
contained in the Central Excise Act, or the Central Excise
Rules, recovery shall be made of all the credit of duty,
which have been taken or utilised, but which would not have
been allowed to be taken or utilised, if the provisions of
sub-section (1) had been in force at all material times”.
If that were the language of clause (b), probably it could
be canvassed, that in view of the nonobstante clause even
the requirement of Rule 57-I, or for that matter even of
Section 11A are not attracted.
Then, even if the two provisions being Section 112
(2)(b) and Rule 57-I are read together, we do not find even
any conflict to be there in between the two provisions, to
accept the contention of the Revenue, that there being a
conflict, the provisions of Finance Act, being basic
statute, and provisions of Rule 57-I being of subordinate
legislation, the provisions of Section 112 would prevail.
In our view, Section 112(2)(b) only permits that recovery
shall be made. Then, it does neither lay down any mechanism
for effecting recovery, nor does it eliminate the invoking
the mechanism existing under the Rules for effecting
recovery. Obviously therefore, the two provisions have to
be read together, and to be construed harmoniously, and the
obvious result would be, that the recovery is to be
effected in accordance with the provisions of the Rules.
If the recovery is to be so made in accordance
with the Rules, being Rule 57-I, the liability of interest
starts from the expiry of specified period after the demand
notice is served. In this regard, may be, that there is
some conflict between the provisions of Section 112(2)(b)
and Rule 57-I, but then, for that purpose, we may take the
provisions of Section 112(2)(b) to provide a period of 30
days instead of 90 days, as provided in Rule 57-I, but
then, starting point of computation of interest liability,
in our view, can possibly not be from the date as held by
the learned authorities below. In that regard, we stand
sufficiently guided from the judgment of Hon'ble the
Supreme Court in Associated Cement Companies Ltd.'s case,
wherein after considering the provisions of Section 112(2)
(b), Hon'ble the Supreme Court held, that till that date
the assessee was having in his favour the order which was
holding the field, and the liability of interest is being
attracted after the order was set aside, and therefore
held, that period of 30 days time to make payment under
Section 112(2)(b) is to commence from today.
In our view, respecting the letter and spirit of
judgment of Hon'ble the Supreme Court, more so in spirit of
Article 141, the earliest point of time from which the time
for making payment under Section 112(2)(b) can be said to
commence is, only from the date the adjudication was made
by the order passed in original authority issuing notice.
And therefore, we are of the view, that if the payment is
not made within a period of 30 days from the date of the
order in original, the liability of payment of interest
under Section 112(2)(b) would arise from the date of expiry
of 30 days from the date of order in original, and
liability cannot be attracted from any anterior point of
time.
It is also significant to note, that the order of
the original authority is dated 29.4.2002, by order dt.
19.2.2003 the Commissioner had exercised his powers under
Section 35E(2), and had directed the Assistant Commissioner
to file appeals before the Commissioner for challenging the
order in original, and lay claim for interest. It is during
this interregnum period, that as noticed above, the appeal
filed by the commissioner in Associated Cement's case was
dismissed by Hon'ble the Supreme Court on 28.11.2002,
upholding entitlement to MODVAT credit, and against that
order review petition was filed in the year 2003, which was
allowed on 8.12.2004. This does indicate, that till passing
of the order dt. 28.11.2002, or in any case till passing of
the judgment by this Court dt. 3.4.2002, the Department was
also not of the view, that these consequences have to flow,
attracting leviability of interest, to commence since the
expiry of 30 days from the date of Finance Act, 2000
receiving assent of the President. It is an afterthought
stage, that on a second thought, the controversy has been
triggered off. Though this may not be a sole or even
material ground for negativing the claim of interest by the
revenue, however this is being mentioned, only as a fact
throwing some light on the fact situation.
Much was sought to be argued on the aspect of
provisions of Section 112(2)(b) being a colourable exercise
of power on the part of the Department, and having been
enacted with a view to penalise the appellants, who had
availed their fundamental right of constitutional remedies,
by approaching this Court. But then, in our view, we are
not inclined to entertain the submission at this stage,
because vide judgment dt. 3.4.2002 the enactment has been
found to be intra-vires. May be that in that judgment this
specific aspect of Section 112(2)(b) may not have been
canvassed, but then, the fact remains, that the legislation
has been found to be intra-vires, and the fact also does
remain, that the judgment dt. 3.4.2002 is already subject
matter of appeal before Hon'ble the Supreme Court.
Therefore, it is always open to the appellants to raise
these contentions before Hon'ble the Supreme Court, if they
so stand advised, and if the Hon'ble Supreme Court so
permits to the appellants.
In our view, in view of the above discussion, the
question as framed is required to be answered in the
manner, that the learned Tribunal was not right in coming
to the conclusion, that under Section 112(2)(b) of the
Finance Act, interest can be levied, even where there is no
adjudication of the show cause notices, which were pending
decision, at the time of commencement of the aforesaid
provisions, rather liability of interest can be attracted
to commence, from expiry of 30 days from the date of making
of determination.
In view of the above, the other question about the
liability of interest uptill 25.10.2000, or 28.10.2000 need
not be gone into by us.
The appeals are accordingly allowed in the manner
that no liability of interest will be attracted on the
amount of Modvat credit availed, before expiry of 30 days
from the date of determination, made by the order in
original, passed pursuant to the notice given by the
authorities concerned, under Rule 57-I.
( DEO NARAYAN THANVI ),J. ( N P GUPTA ),J.
/sushil/
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