excise duty liability arises court decisions
THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI II VERSUS M/S. LUCAS TVS LTD. [MADRAS HIGH COURT]
BRIEF: Duty liability arises and commences from the date of the order of determination and not from the date of the actual liability especially when an order of determination always dates back to the actual date of liability
OUR COMMENTS: The assessee is the manufacturers of 'Wiper Motor Assembly'. The goods was classified by the Revenue under a different Tariff Sub-Headings having higher rate of excise duty.
The Revenue, after hearing, passed Order-in-Original dated 09.01.1995 determining the duty amount directing the assessee to pay the differential duty.
The same was appealed against by the assessee, however, the duty was confirmed by the Commissioner (Appeals), vide his Order-in-Appeal dated 26.12.2000 and the duty was paid by the assessee within three months of passing of the Order-in-Appeal.
The Order-in-Original dated 09.01.1995 being passed before 26.08.1995, the date, on which, the Finance Bill, 1995, got the assent of the President, interest payable was worked out under Section 11AA of the Act, with effect from 26.08.1995 onwards till the date of the payment of the duty.
The issue now involved relates to:
- the interest payable on delayed payment of duty,
- date from which the interest is payable.
- when the duty becomes payable? on the date when the duty becomes due or the date of the original order, determining the liability, or as on the date of the subsequent orders, either reducing or enhancing the tax liability.
The Hon’ble High Court held that from Section 11AA, it is clear that, duty is payable only when the liability is ascertained and that the liability to pay interest arises only on the determination of that duty / liability and also if the ascertained duty is not paid within a period of three months from the date of ascertainment.
Therefore, the contention of the Revenue that the determination of duty liability takes effect from the date on which the liability arises is incorrect and is liable to be rejected.
[Decided against Revenue]