2019 (4) TMI 1863 - HC - Central Excise

Supply of chassis of buses to be used by DMRC - exemption from payment of excise duty - HELD THAT - It is clear that when the chassis component of the buses has already been granted exemption, the Plaintiff is not liable to pay the entire amount of ₹ 160,09,717/- which was imposed as excise duty. The Plaintiff is entitled to seek clarification from the CESTAT as to the exact duty payable by it, keeping in light the order dated 28th December, 2018. Counsel for the Plaintiff submits that ₹ 20 lakhs has been deposited and according to him the entire duty would come to a total of ₹ 52 lakhs approximately. Since, this Court has not adjudicated the exact liability of the Plaintiff, the Plaintiff is permitted to approach the CESTAT by filing an appropriate application in Excise Appeal Nos. 1180/2010 and 1727/2010. In the said application, the Plaintiff shall ensure that DMRC, Tata Motors and the Commissioner Excise, Jaipur and Lucknow are also impleaded as parties - The interim relief granted on 10th January, 2019 shall continue for a period of four weeks from today i.e. till 25th May, 2019 subject to further orders passed by the CESTAT. The CESTAT, may also consider the prayer for interim relief sought by the Plaintiff in respect of coercive measures being taken by the Excise Department and impose such conditions as it deems appropriate in the said application for interim relief. Suit disposed off.

Summary

Issues: Recovery of excise duty against DMRC and Tata Motors, conflicting judgments on excise duty exemption, premature filing of suit, liability determination post-Customs, Excise and Service Tax Appellate Tribunal (CESTAT) judgment, coercive measures by Excise Department, clarification on excise duty payable, deposition of partial excise duty, interim relief continuation.

Analysis:

1. The Plaintiff, M/s Azad Coach Private Limited, filed a suit seeking recovery of excise duty against DMRC and Tata Motors for a total sum of &8377; 1,60,09,717/- along with interest. The dispute arose from a tender floated by DMRC for the supply of 120 chassis of buses, which was awarded to Tata Motors. The Plaintiff, who provided body building services for buses to Tata Motors, was assured by DMRC of full exemption from excise duty for supplies to DMRC.

2. The issue of excise duty exemption became complicated due to conflicting adjudications. The Excise Department challenged the exemption during the execution of the purchase order, leading to a Supreme Court judgment confirming the Plaintiff's liability. However, CESTAT later ruled in favor of Tata Motors, granting them exemption from excise duty on the chassis component of the buses, amounting to approximately &8377; 1.60 crores.

3. The Plaintiff only deposited &8377; 20 lakhs as excise duty, making the suit premature as the full amount was not paid to the excise authorities. Following CESTAT's judgment, the Plaintiff was permitted to approach CESTAT to rectify the excise duty amount in light of subsequent developments and seek clarification on the exact duty payable.

4. The Court directed the Excise Department not to take coercive measures, considering the conflicting judgments and the exemption granted to Tata Motors. The Plaintiff was allowed to file an application with CESTAT to determine the exact liability, involving DMRC, Tata Motors, and the relevant Excise Commissionerates.

5. The interim relief granted to the Plaintiff was extended, pending further orders by CESTAT, which was also authorized to consider the Plaintiff's request for relief from coercive measures by the Excise Department. The remedies available to the Plaintiff post-CESTAT's determination were kept open, and the suit, along with all pending applications, was disposed of.

This detailed analysis outlines the legal complexities surrounding the recovery of excise duty, conflicting judgments, premature suit filing, liability determination, and the subsequent legal steps to be taken by the Plaintiff in light of CESTAT's ruling and ongoing proceedings.