Fiat runs into trouble again - High Court confirms liability of interest from the date of the Supreme Court's order - Dismisses the Writ Petitions with costs
IT is Failure In All Tax matters aka FIAT. You must be remembering the famous FIAT case in Supreme Court, where FIAT sold its cars in India at a loss to compete in and penetrate the market. But Central Excise Department was in no mood to lose its pound. In the much talked about case , the Supreme Court allowed the revenue's appeal on valuation issue, resulting in demand of Rs 311 crores.
Legal Corner Icon — the image was hosted by the publisher and was not captured.The judgement was delivered on 29.08.2012 and the very next day on 30.08.2012, the assessee was presented with a demand to pay a sum of Rs.382,66,99,590/-. (How nice it would be if they were equally prompt in deciding refund matters!) Subsequently, this amount was revised to Rs. 311,16,49,260/- along with interest at the appropriate rate. The assessee initially requested to keep the demand in abeyance as they had filed review petition against the order. After they exhausted all the channels, they requested the Commissioner to allow payment of dues in instalments as per a schedule drawn by them.
Vide letter dated 1st February, 2013 the Commissioner of Central Excise accepted the schedule of payment but insisted on demand of interest at the rate of 18% per annum in accordance with Notification No.5/2011 Central Excise (NT) dated 1st March, 2011 read with CBEC circular No.208/42/96-CX dated 2nd May, 1996 with effect from 29th August, 2012 being the date of the order of the Supreme Court
The company filed Writ Petition against the demand of interest. It is the Petitioners' case that the provision for charging interest and duty on finalisation of the provisional assessment came into effect on 1st July, 2001. The Petitioners contend that under Central Excise Rules, 2001 the proper officer may allow clearance of goods on payment of the duty on provisional basis. Sub-rule (4) of Rule 7 provides for interest on payments by the assessee. It is the Petitioners' contention that prior to 1st July, 2001 there was no specific provision for recovery of interest arising out of finalisation of assessment.
However, the High Court dismissed the Writ Petitions with the following observations:
The interest demanded was not under section 11AA. The department demanded interest in pursuance of the instalments facility granted in accordance with the Notification dated 2nd May, 1996 as stated above the grant of interest free instalments would not have been authorized at all and therefore there is no justification in the Petitioners seeking quashing of the impugned notice.
In the facts of the present case it cannot be disputed that the Petitioner has retained money owing to the Respondents without authority of law and engaged the Respondents in a series of litigations. They then filed Civil Appeals before the Supreme Court which were disposed of on 16th October, 2012 with liberty to file Review Petition. The Review Petition was filed on 19th October, 2012. The review petition came to be dismissed on 27th November, 2012. The Petitioners did not stop there. They then filed a curative petition on or about 2nd January, 2013 which came to be dismissed on 20th February, 2013. Thus, at every opportunity the Petitioners sought to defeat the Revenue's right to amount of duty and there is no reason for the Petitioners to be excused from paying interest.
Accordingly, the High Court dismissed the Writ Petitions and also imposed cost of Rs 50,000/- on the Petitioner.
DDT 2273 - 16.01.2014, had commented, The fault is neither with the Law nor the Board nor the Supreme Court - it is with Fiat - in spite of being the sixth largest car manufacturer in the world, they failed in everything they did in India - including defence of their case in the Supreme Court.
And the failure continues….
For more details on the FIAT case, you may see , , , , ,
Please see for the High Court Order