In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) upheld the demand of Rs. 4.82 crores excise duty against Divisional Forest Officers ( DFO ). It was observed that once the taxability of Resin produced by the appellant and sold by it has been settled, the demand for excise duty has to be confirmed.
The appeals were filed by the Divisional Forest Officer, seeking the quashing of the order passed by the Commissioner of Central Goods and Service Tax, adjudicating the four Show Cause Notices (SCN). The Commissioner confirmed the demand for central excise duty amounting to Rs. 4.82 crores with interest and penalty.
The appellants, who are Divisional Forest Officers in the Government of Uttarakhand, collected Raw Pine Resin2 from pine trees through contract labour and sold the same to processing units by public auction. It needs to be noted that Exemption Notification No. 24/2005 exempted Resin manufactured without the aid of power from payment of duty, but by a Notification dated 01.03.2006, the said exemption given to Resin manufactured without the aid of power was withdrawn. The appellant thereafter obtained registration and paid central excise duty.
However, two buyers filed Writ Petitions in the Uttarakhand High Court challenging the levy of excise duty. These petitions were dismissed and Civil Appeals before the Supreme Court. Given the statement made by the counsel appearing for the parties, the Supreme Court remitted the matter to the High Court for fresh consideration.
The Commissioner, while adjudicating the four show cause notices, took notice of the judgment passed by the Uttarakhand High Court while deciding the Special Appeals and observed that once the taxability of Resin produced by the appellant and sold by it has been settled, the demand of excise duty has to be confirmed.
The Commissioner rejected the contention raised by the appellant that they should not be directed to pay excise duty as they had not collected excise duty from the parties given the judgment of a Judge of the Uttarakhand High Court. The Commissioner also imposed penalties and demanded interest.
No one has appeared on behalf of the appellant. Shri Bhagwat Dayal, the authorised representative appeared for the department and made submissions.
It was evident that once the Notification dated 01.03.2006 was issued withdrawing the exemption earlier granted to manufacture Resin without the aid of power from central excise duty, the appellant obtained registration and paid central excise duty. However, Writ Petitions were filed by two buyers before the Uttarakhand High Court challenging the levy of central excise duty on Resin, which Writ Petitions were dismissed by the Uttarakhand High Court by judgment, but given the statement made by the counsel appearing for both the parties before the Supreme Court, the matter was remitted to the High Court to decide the Writ Petitions afresh.
The appellant contended that they had stopped collecting central excise duty because of the order passed by a Judge of the Uttarakhand High Court on 02.08.2011 and so the appellant should not be asked to pay excise duty.
The two-member bench of Mr Justice Dilip Gupta, President and Mr P V Subba Rao, Member ( Technical ) viewed that when it has been settled that central excise duty would be leviable as Resin is produced, there is no reason to interfere with the impugned orders passed by the Commissioner. The CESTAT dismissed the four appeals.
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