Back
2017 Supreme(Bom) 932
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ANOOP V. MOHTA AND ANUJA PRABHUDESSAI, JJ.
Indo Swiss Embroidery Industries Limited - Appellant
Versus
Commissioner of Central Excise, Vapi - Respondent
CENTRAL EXCISE APPEAL NO. 111 OF 2015
Decided On : 17-07-2017
For the Appellant : Mr. Bharat Raichandani, Mr. Gaurav Agrawal
For the Respondent: Mr. Pradeep S. Jetly
The central legal point established in the judgment is the requirement for clear statutory mandates for the collection of taxes, penalties, and interest, and the unsustainable nature of any imposition of penalties or interest without specific provisions.
Headnote:
Central Excise Act - Classification of Goods - Additional Duties of Excise (Textile & Textile Articles) Act, 1978 - Section 3(3) of the Excise Act - Levy and Collection of additional duties - Summary of Acts and Sections: Central Excise Act, 1944 (Excise Act), Additional Duties of Excise (Textile & Textile Articles) Act, 1978 (ADE (T&TA) Act), Section 11AC, Section 11AB - The court discussed the classification of goods under the Central Excise Act and the Additional Duties of Excise (Textile & Textile Articles) Act, 1978, and the provisions of Section 3(3) of the Excise Act, which relates to the levy and collection of additional duties. The court highlighted the absence of provisions for imposing penalty and charging interest under the ADE (T&TA) Act, emphasizing the need for specific statutory mandates for the collection of taxes, penalties, and interest.
Fact of the Case:
The appellant, engaged in the manufacture of Embroidered Grey Fabrics, was alleged to have incorrectly classified the product under the Central Excise Tariff Act, leading to a demand for additional duties of excise. The appellant contested the demand, leading to a series of appeals and orders by the authorities.
Finding of the Court:
The court found that the demand of penalty and interest, without specific provisions in the ADE (T&TA) Act, was unauthorized and unsustainable. It emphasized the need for clear statutory mandates for the collection of taxes, penalties, and interest, and highlighted that any imposition of penalties or interest without specific provisions is unwarranted and without authority of law.
Issues: The issues revolved around the classification of goods, demand for additional duties of excise, penalties, and interest, and the absence of specific provisions in the ADE (T&TA) Act for imposing penalties and charging interest.
Ratio Decidendi: The court held that the absence of specific provisions in the ADE (T&TA) Act for imposing penalties and charging interest rendered the demand unauthorized and unsustainable. It emphasized the need for clear statutory mandates for the collection of taxes, penalties, and interest, and highlighted that any imposition of penalties or interest without specific provisions is unwarranted and without authority of law.
Final Decision: The court allowed the appeal, quashing and setting aside the final order passed by the Appellate Tribunal, emphasizing that the demand for penalties and interest, without specific provisions, was unsustainable.
Anoop V. Mohta, J.
1. This is an Appeal under Section 35G of the Central Excise Act, 1944 (for short, “Excise Act”). The Appellant has preferred this Appeal against final order dated 27.09.2013 passed by the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad (The Appellate Tribunal) and prayed to quash and set aside the order on the following questions of law:
(1) Whether, in the facts and circumstances of the present case, the Appellate Tribunal was correct in holding that the appellant is liable to pay interest when there is no provision in law for charging interest?
(2) Whether, in the facts and circumstances of the present case, the Appellate Tribunal was correct in holding that the appellant has not agitated this issue and hence, the same cannot be gone into?
2. Heard finally by consent of the parties, therefore, this final judgment.
3. The relevant facts are as under:
The Appellant is inter alia, engaged in the manufacture of Embroidered Grey Fabrics falling under Chapter Sub Heading No. 5804.11 of the Central Excise Tariff Act, 1985 (Excise Tariff Act). The Central Excise Officers, Daman, summoned the appellant for production of records. On scrutiny of the records, the central excise department alleged that the appellant had incorrectly classified the product under chapter heading No. 5804.11 as “Lace/Motif of Cotton” instead of chapter heading No. 5804.19 as “Embroidery”. The department was of the view that the appellant is liable to pay AED (TTA) @ 15% instead of 8% w.e.f. 20/08/1998 onwards.
4. The provision of law which is applicable is: Sub-section (3) of Section 3 of the Additional Duties of Excise (Textile & Textile Articles) Act, 1978 (ADE (T&TA) Act) and the same reads as under:
“Section 3 : Levy and Collection of additional duties :-
(1) …..
(2) …..
(3) The provisions of the Central Excise act, 1944 and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, so far as may be, apply in relation to the levy and collection of the duties of excise leviable under this section in respect of any goods as they apply in relation to the levy and collection of the duties of excise on such goods under the Act or other rules.”
It is clear that Section 3(3) of the Excise Act adopts the provision of Central Excise and Salt Act relating to levy and collection including of refund and exemption from duty. There is no provision in this ADE (T&TA) Act for imposing of penalty so contemplated under Section 11AC of Excise Act and the charge of interest provided under Section 11AB of Excise Act. The above provision, therefore, we have to keep in mind while deciding the issues so raised in the present Appeal.
5. On 02.05.2003, the appellant replied to the show cause notice and denied the allegations. On 31.03.2004, the Joint Commissioner, Central Excise, Vapi vide its order confirmed the entire demand of ADE (T&TA) of Rs.6,23,478/- along with interest under Section 11AB and imposed equal penalty amounting to Rs.6,23,478/- under Section 11AC of the Central Excise Act, apart from penalty of Rs.1,00,000/- under erstwhile Rule 173Q of Central Excise Rules, 1994 (The Rules).
6. Being aggrieved, the appellant filed appeal before the Appellate Tribunal. The Appellate Tribunal vide Order dated 21.09.2005 held that the appellant is liable to pay the demand. However, the Appellate Tribunal remanded the matter back to the original authority to re-determine the penalty to be imposed under Section 11AC in light of the decision of the Apex Court in the case of State of Madhya Pradesh vs. M/s. BHEL, 1998 (99) ELT 33 (SC). On 20.10.2006, however, vide its order, the Joint Commissioner of Central Excise, Vapi imposed same penalty on the appellant under Section 11AC of the Excise Act and the Rules.
7. Being aggrieved, the appellant herein filed appeal before the Commissioner of Central Excise (Appeals), Vapi. The Commissioner of Central Excise (Appeals) vide stay order dated 15.10.2007 directed the appellan
