2006 (9) TMI 41 - AT - Central Excise

Demand - Excess payment of cess on crude oil in month of march2004 adjusted in month of april by taking suo moto credit - Demand of duty alongwith interest not sustainable because it is permitted by Commissioner himself

Summary

Issues:
1. Validity of the procedure followed by the appellants for payment of Cess.
2. Compliance with the guidelines issued by the Commissioner in relation to Cess payment.
3. Legality of the demand raised by the Revenue for excess credit taken by the appellants.
4. Applicability of penalty and interest under Central Excise Act, 1944.
5. Interpretation of relevant case laws and circulars in the context of the present case.

Analysis:

1. Validity of Cess Payment Procedure:
The appellants contended that they followed the procedure outlined in Trade Notice 13/2001, directing them to provisionally debit the Cess payable in their PLA based on quantities cleared by the end of the month. They argued that the assessment should be finalized within a month, as per the Trade Notice, and that the Commissioner's finding of non-provisional assessment was incorrect. The Superintendent's letter also supported the provisional nature of the assessment, emphasizing the procedural compliance by the appellants.

2. Compliance with Guidelines:
The appellants highlighted that the Show Cause Notice and the impugned order were contrary to the Circular/Trade Notice, as assessments for the relevant period had not been completed. They argued that the Revenue prematurely issued the Show Cause Notice before finalizing the assessment, which was against the Trade Notice requirements. The modifications in the Cess payment procedure by the Commissioner were also brought to attention, indicating a shift in the refund claim process under Section 11B.

3. Legality of Excess Credit Demand:
The Revenue demanded recovery of the excess credit taken by the appellants, citing violation of guidelines and non-compliance with the prescribed procedures. However, the appellants justified their actions by referring to past practices where similar adjustments were accepted by the Department. They argued that the excess payment adjustment was permissible, especially since it was in line with the modified procedure communicated by the Commissioner.

4. Penalty and Interest Applicability:
While the Adjudicating Authority confirmed the demand and interest under Section 11AB, no penalty was imposed. The appellants challenged the demand of interest under Section 11AB, contending that it was not legally sustainable. They relied on legal precedents and circulars to support their argument that the credit availed under provisional assessment was not subject to recovery under Section 11A.

5. Interpretation of Case Laws and Circulars:
The appellants referenced various case laws to support their position, emphasizing that the adjustment made in the PLA was a credit entry and did not fall under the purview of Section 11B of the Central Excise Act, 1944. They also highlighted the evolving nature of procedures, as evidenced by the modifications in the Cess payment process communicated by the Commissioner. The Tribunal ultimately ruled in favor of the appellants, allowing the appeal and providing consequential relief based on the procedural justifications and past practices.

This detailed analysis of the judgment showcases the procedural intricacies, legal arguments, and interpretations that shaped the final decision of the Appellate Tribunal CESTAT, Bangalore in this case.