|
Retrospective Application of Sec. 11AB of the Central Excise Act, 1944
Central
Excise Circular No. 655 dated 26th August 2002
I
am directed to say that doubts have been raised as to whether provisions of
Section 11AB of the Central Excise Act, 1944, will apply to past clearances or
not.
2.
The Board had clarified vide F. No. 354/ 118/ 96-TRU dt. 6.1.97 (Para 3)
that it would apply even to past cases where duty u/s 11A (2) is determined on
or after 28.9.96.
3.
Further, on the matter being referred to the Solicitor General of (SG),
in his detailed opinion dated 3.1.2000, he had opined that sec. 11AB would apply
to all adjudications orders passed on or after 28.9.2000, irrespective of the
fact whether it relates to clearances made before 28.9.96 or after. A copy of
the SG�s opinion was sent to all Chief Commissioners vide Board�s Letter F.
No. 387/90/98-JC dt. 27.3.2001.
4.
However, in CEGAT Order No. 1375/ 97 dt 22.4.97 in the case of M/s. M.P.
Tapes Vs. CCE. Coimbatore, it has, inter alia, been held that provisions of sec.
11AB, inserted w.e.f. 28.9.96 are in the nature of panel interest and would
apply only to those cases where clearances were affected after 28.9.96. The
Reference Application filed by the Commissioner before the CEGAT was dismissed
by the CEGAT on 28.5.1998 [reported in 1998 (103) ELT 128 (TRIB)]. The Reference
Application before the Madras High Court (RCP No. 1/99) was dismissed on
12.5.2000. The Deptt.�s SLP (CC 7698/2000) against the High Court was
dismissed by the Apex court on 27.11.2000.
5.
The matter has been examined in the Board. It is seen that Section 11AB
(2), when it was introduced on 28.9.96, inter alia, stated that the provisions
of sec. 11AB(1) � i.e. for charging interest � would not apply to cases
where duty become payable before the Finance Bill, 1996, received the assent of
the President (which was on 28.9.96). A view was taken by the Department in its
Circular dt 6.1.97 and by the SG in his opinion dt. 3.1.2000, that duty becomes
�payable� only after adjudication and therefore sec. 11AB (2) would apply to
all cases where adjudications are done on and from 28.9.96, irrespective of the
fact whether it relates to clearances of an earlier period. The Apex Court has,
however, confirmed a contrary view in the case of M/s. M.P. Tapes.
6.
Section 11AB(2) as well as section 11AB(1) has been substituted w.e.f.
11.5.2001 by the Finance Act, 2001, making it not very clear that Section 11AB
will apply only to cases where duty had become payable or ought to have been
paid after 1.5.2001. Further, proviso to section 11AB (1), as inserted w.e.f
11.5.2001, makes it quite clear that duty becomes �payable� on the basis of
instructions or directions of the Board also and not necessarily because of
adjudication of a case.
7.
Thus, the net effect of the judgement in the case of M.P. Tapes and the
amendment made to section 11AB w.e.f. 11.5.2001 is that is that the section can
be invoked only in respect of clearance affected after 98.9.96, irrespective of
the date of passing of the adjudication order.
8.
Trade notice may be issued for the information of the Trade.
9.
Hindi version will follow.
10.
Receipt of these instructions may kindly be acknowledged.
|