Case Note & Summary
The appellant, Godrej Industries Limited, was engaged in the manufacture of Liquid Hair Dye during the period from September 1982 to March 1985. The department issued a show cause notice proposing classification under Tariff Item 14F, but allowed provisional clearance under Rule 9B of the Central Excise Rules, 1944. The appellant paid duty under Tariff Item 68 provisionally. The Assistant Collector confirmed classification under Tariff Item 14F in May 1983, and the Appellate Commissioner upheld this in August 1985. The appellant paid the differential duty in September 1985. The department later issued a demand for interest under Section 11DD of the Central Excise Act, 1944, which was confirmed by the Commissioner and the CESTAT. The High Court framed two questions of law: whether interest under Section 11DD is payable from the date the section came into force (14-5-2003) till payment, and whether interest is payable at all in the absence of a provision for charging interest on finalization of provisional assessment. The court analyzed the scheme of provisional assessment under Rule 9B and the provisions of Section 11DD. It held that Section 11DD applies only when duty is not paid within the period specified in a notice of demand under Section 11A, and not to cases where duty is paid at the time of clearance under provisional assessment. The court noted that the differential duty was paid in 1985, long before Section 11DD was introduced in 2003, and that the section cannot have retrospective effect. The court allowed the appeal, set aside the CESTAT's order, and answered the questions of law in favor of the appellant.
Headnote
A) Central Excise - Interest on Differential Duty - Section 11DD of Central Excise Act, 1944 - Provisional Assessment - The issue was whether interest under Section 11DD is payable on differential duty determined upon finalization of provisional assessment under Rule 9B of the Central Excise Rules, 1944. The court held that Section 11DD applies only when duty is not paid within the period specified in a notice of demand under Section 11A, and not to cases of provisional assessment where the duty is paid at the time of clearance. The CESTAT's direction to pay interest from the date Section 11DD came into force was set aside. (Paras 1-16)
Issue of Consideration
Whether interest under Section 11DD of the Central Excise Act, 1944 is payable on differential duty determined upon finalization of provisional assessment under Rule 9B of the Central Excise Rules, 1944.
Final Decision
The appeal is allowed. The order of CESTAT dated 30-4-2013 is set aside. The questions of law are answered in favor of the appellant and against the respondent. No order as to costs.
Law Points
- Interest under Section 11DD of Central Excise Act
- 1944 is not payable on differential duty determined upon finalization of provisional assessment under Rule 9B of Central Excise Rules
- 1944
- as the provision applies only to cases where duty is not paid within the period specified in a notice of demand under Section 11A.
Case Details
2014 LawText (BOM) (10) 59
Central Excise Appeal No.291 of 2013
S.C.Dharmadhikari, A.K.Menon
V.Sridharan, Prakash Shah, Y.R.Mishra
Godrej Industries Limited
Commissioner of Central Excise, Mumbai-II
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Nature of Litigation
Appeal under Section 35G of the Central Excise Act, 1944 against the order of CESTAT directing payment of interest under Section 11DD on differential duty determined upon finalization of provisional assessment.
Remedy Sought
The appellant sought to set aside the CESTAT order directing payment of interest under Section 11DD.
Filing Reason
The appellant challenged the CESTAT order confirming interest liability under Section 11DD on differential duty paid in 1985, contending that the section was not applicable to provisional assessments and had no retrospective effect.
Previous Decisions
The Assistant Collector confirmed classification under Tariff Item 14F on 24-5-1983; the Appellate Commissioner upheld the order on 30-8-1985; the appellant paid differential duty on 30-9-1985; the Commissioner confirmed interest demand under Section 11DD; CESTAT upheld the interest demand.
Issues
Whether interest under Section 11DD of the Central Excise Act, 1944 is payable on differential duty determined upon finalization of provisional assessment under Rule 9B of the Central Excise Rules, 1944.
Whether Section 11DD can be applied retrospectively to demand interest for a period prior to its enactment.
Submissions/Arguments
The appellant argued that Section 11DD applies only when duty is not paid within the period specified in a notice of demand under Section 11A, and not to cases of provisional assessment where duty is paid at the time of clearance.
The appellant further argued that the differential duty was paid in 1985, before Section 11DD was introduced in 2003, and the section cannot have retrospective effect.
The respondent argued that interest under Section 11DD is payable from the date the section came into force (14-5-2003) till the date of payment of differential duty.
Ratio Decidendi
Interest under Section 11DD of the Central Excise Act, 1944 is not payable on differential duty determined upon finalization of provisional assessment under Rule 9B of the Central Excise Rules, 1944, as the provision applies only to cases where duty is not paid within the period specified in a notice of demand under Section 11A. Section 11DD cannot be applied retrospectively to demand interest for a period prior to its enactment.
Judgment Excerpts
Section 11DD applies only when duty is not paid within the period specified in a notice of demand under Section 11A, and not to cases of provisional assessment where the duty is paid at the time of clearance.
The differential duty was paid in 1985, long before Section 11DD was introduced in 2003, and the section cannot have retrospective effect.
Procedural History
The Assistant Collector confirmed classification under Tariff Item 14F on 24-5-1983; the Appellate Commissioner upheld the order on 30-8-1985; the appellant paid differential duty on 30-9-1985; the Commissioner confirmed interest demand under Section 11DD; CESTAT upheld the interest demand on 30-4-2013; the appellant filed the present appeal under Section 35G of the Central Excise Act, 1944.
Acts & Sections
- Central Excise Act, 1944: Section 11A, Section 11DD, Section 35G
- Central Excise Rules, 1944: Rule 9B, Rule 173B
