The Kolkata bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) rejected the claim of Steel Authority of India Ltd (SAIL)as the excise duty demand on steel is not maintainable as per Tribunals previous order.
M/s Steel Authority of India Limited, the appellant challenged the payment of interest on Central Excise duty confirmed by way of impugned order for the demand of Central Excise duty during the period January 2000 to December 2004.
The appellant is engaged in the activity of manufacturing various steel products, namely, billets, rounds, HT Bars, blooms, etc. to its independent customers as well as clearing the same to its job workers. The said goods were cleared by the appellant to the job-workers upon payment of excise duty on value determined as per Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
The job-workers used the said goods for further manufacturing, by undertaking the processes of say-cutting, rolling, reeling, colour coding, etc. and supplied the job-worked goods back to the appellant on payment of duty. A show-cause notice was issued to the Appellant, proposing differential duty for the period July 2000 to December 2004 on the ground that the assessable value of the goods cleared to job workers ought to be computed in terms of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 r/w Section 4(1)(b) of the Central Excise Act,1944.
The Tribunal vide Order No. S-519/A-1148/Kol/07 dated 11.06.2007 dismissed the appeal to the extent of duty demand and interest for want of clearance from the Committee of Disputes. However, the penalty imposed was set aside. On appeal, the Apex Court vide its order dated 28.07.2022, directed for restoration of this appeal before this Tribunal on the limited aspect of interest on duty.
The Counsel appearing on behalf of the appellant submitted that the demand of duty confirmed is a revenue-neutral situation, as there is no demand of duty, therefore, no interest is payable by the appellant.
On the other hand, the A.R. for the Revenue submitted that although there is a situation of revenue neutral, they are required to pay interest for the intervening period as held by this Tribunal in the case of Essar Steel Limited Vs. Commissioner of Central Excise.
The Tribunal held that no interest is payable by the appellant as it is a revenue-neutral situation. Accordingly, the demand of interest is set aside. Thereafter, recovery proceedings were initiated against the appellant and the said amount was confirmed, the duty was recovered from the appellant, but the appellant contested the matter before the Apex Court. During the pendency of the appeal before the Apex Court, the appellant filed a refund claim of the said recovered amount of Rs.15,65,36,574/- confirmed by the order dated 31.03.2006. The said refund claim was rejected.
The appellant submitted that once the matter goes before the Committee of Dispute, the operation of the order under challenge got suspended. Further, to go before the Committee of Dispute is not merely for the appellant to get approval or rejection regarding its right to file an appeal.
The purpose is also the resolution by effective conciliation of disputes between the PSUs and the Union of India, represented by Ministries or their agencies. Such a resolution wherein the Committee of Disputes does not require the matter to be litigated does not necessarily mean confirmation of demand against the assessee in tax matters. Such resolution may also be achieved by Revenue not enforcing the demand.
By the resolution by way of conciliation suggested by COD, the demand in the instant case per se was not recoverable. However, the Department still insisted on recovery and got the same affected by partly adjusting against the rebate claim of the Appellant and partly getting the Appellant to pay through its PLA, which was paid under protest.
A two-member bench of Mr Ashok Jindal, Member (Judicial) and Mr K.Anpazhakan, Member (Technical) observed that “since the demand was revenue neutral, the same ought not to have been recovered by the Revenue, which was heard and was a party to the conciliation process before the COD. There is no direction in the said order regarding the confirmation of the demand or for the appellant to pay. Therefore, the recovery affected is against the terms of conciliation before the COD and cannot be said to conform to the adjudication order and such adjudication order cannot be said to be final as regards the confirmation and recovery of demand. Therefore, the appellant is entitled to refund and interest on delayed refund is also entitled.”
As the appeal filed by the appellant regarding the duty of demand is dismissed as not maintainable by this Tribunal vides, the CESTAT upheld the impugned order.
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