Appellant collected duty liability at the enhanced rate even though they were discharging duty liability only at lower rate - appellant is liable to discharge interest liability: CESTAT
DURING the period September 1982 to March 1985, the appellant manufactured "Liquid Hair Dye". The appellant sought classification of the said product under the erstwhile TI 68 @8% adv. whereas the department wanted to classify the product under TI 14F @105% adv. The goods were provisionally assessed.
From the price declared, the assessable value was arrived at by the assessee after deducting duty at 105% adv. However, the appellant discharged the duty liability only @ 8% adv.
The dispute relating to classification went upto the Apex Court and vide order dated 09/07/2008 () the classification was settled under Tariff Item 68.
Thereafter, the provisional assessment for the period September 1982 to March 1985 was finalized. The adjudicating authority observed that since the appellant has sought deduction towards duty from the listed price @105% adv., whereas they paid duty only @ 8% adv. there is an under valuation of the goods.
Accordingly he re-determined the assessable value after fixing an abatement of 8% towards excise duty and confirmed a duty demand of Rs.20,84,956/-. He also confirmed interest liability u/s 11AB and imposed an equivalent amount of penalty u/r 173Q of CER, 1944.
Since the order was upheld by the Commissioner(A), the appellant is before the CESTAT.
It is submitted that the duty has been paid Under Protest. Further, there cannot be any interest liability as the legal provisions for the same were introduced only in the year 2001 under rule 9B; and if the provisions of s.11D are considered, interest provisions u/s 11DD came into effect only from 14/05/2003.
The Revenue representative submitted that the provisional assessment was finalized on 25/06/2012 and the duty liability was determined u/s 11A and hence interest is payable u/s 11AB. As for penalty, since appellant adopted two rates of duty, one for collection as part of the price form the customers and the other, a lower rate for payment of duty to the exchequer, imposition of penalty is warranted.
The Bench, inter alia, observed -
"5.2 …it is seen that the appellant did collect the duty liability at the enhanced rate applicable to tariff item 14F even though they were discharging the duty liability only at the lower rate applicable to Tariff Item 68. In other words, the appellant wants to enjoy the benefit of duty collection at the higher rate from the customers without remitting the same to the exchequer. Therefore, the appellant is liable to discharge interest liability on the duty amount inasmuch as they have collected the same from the customers without remitting to the exchequer. Therefore, prima facie we are of the considered view that the appellant had not made out a case for complete waiver of dues adjudged against them. Accordingly, we direct the appellant to remit the interest liability calculated at the applicable rate for the period 14/05/2003 the date on which the provisions of Section 11DD came into force till the date on which the duty liability was discharged…."