2019 (2) TMI 753 - AT - Central Excise

Recovery of amount collected by appellant from their customers - Section 11D of CEA - applicability of time limitation for recovery of the amount - delay in taking up adjudication - Incentive scheme. Held that - This was not the original demand for recovery under Sec.11D. The period in question is September, 1991 to August, 1993 and the show cause notice was issued on 27.02.1996. Thus, it cannot be said that there is inordinate delay in issuing the demand. There certainly was delay in deciding the case in the remand proceedings after the provisions of Sec.11D were amended retrospectively from 1991. Delays in adjudication either in the original or in the remand proceedings itself will not amount to delay in issuing the demand. There is no time limit prescribing within which an adjudication, after denovo proceedings has to be completed. Similarly, there is no time limit within which the appeals have to be disposed of. Such delays are certainly highly undesirable but they do not vitiate the proceedings of the adjudication nor do they override the statutory provisions of Sec.11D. It cannot be accepted that delay in taking up the adjudication proceedings denovo would vitiate the demand under Section 11D - the demand under Section 11D in the impugned order is liable to be upheld - appeal dismissed - decided against appellant.

Summary

Issues:
- Interpretation of Sec.11D of the Central Excise Act regarding recovery of excise duty differentials under an incentive scheme for sugar factories.
- Applicability of judgments by different High Courts and the Supreme Court in similar cases.
- Consideration of delay in initiating denovo proceedings under Sec.11D.

Analysis:
1. The appeal challenged Order-in-Original No. 16/2011 regarding the demand for remittance of excise duty differentials by a sugar factory under an incentive scheme. The scheme allowed the factory to collect higher excise duty on free sale sugar and retain the difference for specific purposes. The issue arose when Sec.11D was introduced in 1991, requiring such differentials to be remitted to the government. The original authority confirmed the demand in 1997, leading to an appeal and subsequent remand by CESTAT in 1999, pending the enactment of a recovery mechanism under Sec.11D.

2. The Finance Act 2000 introduced the recovery mechanism under Sec.11D, leading to fresh denovo proceedings initiated in 2011 after 11 years. The Commissioner upheld the demand for recovery based on the amended provision. The appellant cited the case of Kisan Sahakari Chini Mills Ltd, where the Tribunal and the High Court held in favor of the appellant, contrasting with judgments from other High Courts. The appellant also referred to the case of New Holland Tractors India Pvt Ltd, where the High Court of Allahabad ruled against the applicability of Sec.11D in similar circumstances.

3. The department argued for the applicability of Sec.11D post its introduction in 1991, emphasizing the absence of a time limit for raising demands under the provision. The Tribunal considered conflicting judgments on the issue, noting the differing interpretations by various High Courts. Despite acknowledging the delay in initiating denovo proceedings, the Tribunal upheld the demand under Sec.11D, emphasizing that delays in adjudication do not invalidate statutory provisions. The decision was based on the understanding that delays in proceedings do not override the applicability of Sec.11D, leading to the rejection of the appeal and upholding of the impugned order.

In conclusion, the judgment focused on the interpretation and application of Sec.11D in the context of excise duty differentials under an incentive scheme for sugar factories. The Tribunal considered conflicting judgments from various High Courts, emphasizing the statutory provisions and rejecting the argument of delay in proceedings affecting the demand under Sec.11D.