2013 (12) TMI 875 - AT - Central Excise

Classification of Liquid Hair Dye Under Tariff item 68 OR 14F - Re-determination of the assessable value after fixing an abatement of 8% - Unjust enrichment Held that - Following GODREJ INDUSTRIES LTD. Versus ASSTT. COLLECTOR OF C. EX., BOMBAY-II 2002 (9) TMI 128 - HIGH COURT OF JUDICATURE AT BOMBAY - Where a person approaches the High Court but fails, he cannot take advantage of the amount of duty so collected - He is under an obligation to return the said amount to the Revenue - this is a clear case of undue enrichment. The appellant collected the duty liability at the enhanced rate applicable to tariff item 14F even though they were discharging the duty liability only at the lower rate applicable to Tariff Item 68 the appellant wants to enjoy the benefit of duty collection at the higher rate from the customers without remitting the same to the exchequer - the appellant is liable to discharge interest liability on the duty amount as they have collected the same from the customers without remitting to the exchequer - Prima facie the appellant had not made out a case for complete waiver of amount till the disposal - the appellant is directed to remit the interest liability calculated at the applicable rate for the period 14/05/2003 the date on which the provisions of Section 11DD came into force till the date on which the duty liability was discharged upon such compliance rest of the duty to be waived till the disposal Partial stay granted.

Summary

Issues involved:
Classification of product under Tariff Item 68 vs. Tariff Item 14F, under-valuation of goods, interest liability on provisional assessment, penalty under Rule 173Q of Central Excise Rules, 1944, appellant's plea for stay of interest amount and penalty, liability to pay interest in respect of provisional assessment, imposition of penalty under 11AC, doctrine of unjust enrichment, duty collection at higher rate from customers without remitting to exchequer, waiver of dues adjudged against appellant.

Classification Dispute and Under-Valuation:
The case involved a dispute regarding the classification of "Liquid Hair Dye" by the appellant under Tariff Item 68, while the department sought to classify it under Tariff Item 14F. The appellant had provisionally assessed the goods, leading to a disagreement on the assessable value. The adjudicating authority determined an under-valuation of the goods due to the appellant paying duty at a lower rate than declared, resulting in a duty demand of Rs. 20,84,956/-, along with interest liability under Section 11AB and a penalty under Rule 173Q of the Central Excise Rules, 1944.

Interest Liability and Penalty Imposition:
The appellant contended that interest liability was not applicable during the provisional assessment period (1982-1985) as the relevant provisions were introduced later. The appellant argued against the imposition of interest and penalty, citing the absence of provisions for charging interest during the said period. However, the Revenue argued that interest liability under Section 11AB was justified as the duty liability was determined under Section 11A, emphasizing the appellant's duty to pay interest and justifying the penalty under 11AC due to the dual rates of duty adopted by the appellant.

Doctrine of Unjust Enrichment and Duty Collection:
The Tribunal referred to a High Court judgment emphasizing the doctrine of unjust enrichment, stating that no party can collect duty from customers at a higher rate and retain it without remitting to the State. The appellant collected duty at the higher rate applicable to Tariff Item 14F but paid duty at the lower rate for Tariff Item 68, leading to a case of undue enrichment. The Tribunal held that the appellant must remit interest liability on the duty amount collected from customers and directed compliance with the payment of interest calculated from the date the relevant provisions came into force.

Conclusion and Waiver of Dues:
The Tribunal concluded that the appellant had not established grounds for a complete waiver of the dues adjudged against them. It directed the appellant to remit the interest liability calculated from the date of the relevant provisions' enforcement until the duty liability was discharged. The Tribunal granted a waiver of the pre-deposit of the balance of dues subject to compliance within eight weeks, with recovery stayed during the appeal's pendency.

This detailed analysis covers the classification dispute, under-valuation, interest liability, penalty imposition, the doctrine of unjust enrichment, and the Tribunal's decision regarding the appellant's plea for a stay of interest amount and penalty, emphasizing compliance with the payment of interest while granting a waiver of the pre-deposit of dues adjudged against the appellant.