A.K. Menon, J.
1. The above appeal filed under section 35G of the Central Excise Act, 1944 (the Act) seeks to raise the following questions of law:-
â(a) Whether, under the facts and circumstances of the case, the CESTAT was justified in directing to deposit interest liability for the period 14-5-2003 (when Section 11DD came into force) till the day demand of differential amount was paid?
(b) Whether in the facts and circumstances of the case, the CESTAT was justified in directing to deposit interest liability in absence of provision to charge interest on amount determined on finalization of provision assessment?â
The third question is merely consequential.
2. The facts in brief are as follows:-
The Appellant, a company is inter alia engaged in the manufacture of Liquid Hair Dye (the product) falling under Tariff Item No.68 of the First Schedule to the Act during the period from September, 1982 to March, 1985 (the relevant period). The Appellant filed classification list in terms of Rule 173B of the Central Excise Rules [the Rules] classifying the product. On or about 13th July, 1982 the department issued a show cause notice bearing No.Gen.6/VL/IV/Godrej/Soap/81/Pt.II/5619 calling upon the Appellant to show cause as to why the product cleared by the Appellant should not be classified under Tariff Item 14F. Meanwhile, it allowed the Appellant to clear the goods provisionally under Tariff Item 14F pending a final decision as to classification. On or about 8th September, 1982, the Appellant filed revised classification list and price list and disputed the classification proposed by the department as 14F. In anticipation of finalisation of the provisional assessment, the Appellant computed duty under Tariff Item 14F till March, 1985. In response thereto, the Superintendent of Central Excise vide letter dated 14th September, 1982 allowed clearances under Rule 9B. Accordingly, during the relevant period, the Appellant provisionally assessed the product under Tariff Item 68 and cleared it on payment of duty which was applicable. The Assistant Collector of Central Excise vide order-in-original dated 24th May, 1983 [Exhibit-B to this Appeal] held that the product would fall under Tariff Item 14F and confirmed the demand of differential duty of Rs.1,16,10,001.08.
3. The Appellant challenged the order-in-original in Writ Petition No.1460 of 1983 in this Court, challenging the classification of the product under Tariff Item No.14F and also the demand for differential duty. The Respondent was restrained by an interim order 1st July, 1983 from recovering any excise duty in excess of duty payable under Tariff Item No.68. Thereafter, show cause notices dated 2nd June, 1983, 7th June, 1985 and 17th October, 1988 came to be issued. In the show cause notice dated 17th October, 1988 it is alleged that the Appellant claimed higher abatement of excise duty and sought to recover differential duty amounting to `20,84,955.72 under proviso to section 11A(1) of the Act read with Rule 9(2) of the Rules as also penalty under section 173Q(1) of the Rules.
4. On 17th September, 2002, this Court dismissed the Writ Petition upholding the order dated 24th May, 1983 classifying the product under Tariff Item 14F. Being aggrieved by this order, the Appellant filed Civil appeal No.228 of 2003 before the Hon'ble Supreme Court. The Supreme Court allowed this appeal and held that the liquid hair dye manufactured by the Appellant during the relevant period is classifiable under Tariff Item 68. Thereafter, the department held a personal hearing on 9th September, 2009 in the matter of the show cause notices.
5. A common reply was filed in which the Appellant contended that the show cause notices are required to be dropped and the classification under Tariff Item 68 was required to be upheld and there was no question of recovery differential duty or penalty. They also clarified that the interest was not payable under section 11AB introduced on 28th September, 1996 and which was not applicable to the relevant period. The Appellant, therefore, contended that the provisions of section 11AA would apply only after the expiry of three months from the date of determining the duty liability and, therefore, no interest could be levied. Written submissions were also filed.
6. After the hearing, vide order-in-original dated 25th June, 2012 the Additional Commissioner of Central Excise, Mumbai II confirmed the demand of Rs.20,84,955.72 under section 11A(2) of the Act along with interest under section 11AB and also imposed penalty of Rs.20,84,960/- under Rule 173Q(1) of the Rules. On 21st August, 2012 the Appellant paid a sum of Rs.20,84,956/- which was demanded in the order dated 25th June, 2012 and filed an appeal before the Commissioner of Central Excise, which came to be heard on 10th December, 2012 and resulted in the entire demand being confirmed vide order dated 31st December, 2012, including the amount of penalty. It was held that the duty paid at the time of removal of goods was not in accordance with the provisional assessment inasmuch as the Appellant contravened the provisions of section 4(4)(d)(ii). The order relied upon the judgment of this Court in the assessee's own case in Writ Petition No.1460 of 1983 holding that the demand is maintainable applying principles to analogous to section 11D of the Act, therefore, the interest and penalty are payable.
7. We may observe at this stage that the order in appeal was in the teeth of the order passed by the Hon'ble Supreme Court in the assessee's own case and in which the Hon'ble Supreme Court had rejected the Respondent's classification of the product under Tariff Item 14F and upheld the Appellant-assessee's case under Tariff Item 68.
8. Being aggrieved by the said Order-in-appeal of the Commissioner of Central Excise (Appeals), the Appellant filed appeal No.E/86555/13-MUM along with stay application No.E/STAY/94729/13-MUM before the Customs, Excise Service Tax Appellate Tribunal (CESTAT). The aforesaid stay application came up for hearing on 7th October, 2013. The Appellant was seeking stay of the interest amount and penalty inter alia contending that the duty amount has already been collected from the customers under section 11D of the Act before the introduction of section 11DD which came into force from 14th May, 2005. It is contended that in the absence of any provision, interest was not chargeable. Vide the impugned order dated 7th October, 2013, the CESTAT directed the Appellant to remit the interest liability calculated at the applicable rate for the period 14th May, 2003 to the date on which the provisions of section 11DD came came into force till the date on which the duty liability was discharged. The present appeal impugns the said order.
9. We have heard Mr.Sridharan, learned Senior Counsel for the Appellant and we are of the view that essentially and as correctly pointed out by him, the only question which requires to be considered is:-
âWhether in the facts and circumstances of the case, the Appellate Tribunal is correct in directing pre-deposit of interest amount for the period beginning 14-5-2003 (from the date Section 11DD came into effect) till the date of payment of differential duty demand arising on finalization of provisional assessment in spite of the fact that the Section 35F of Central Excise Act, 1944 as existing prior to 11-5-2007 did not provide for pre-deposit?â
10. Mr.Sridharan further submitted that in the case of State of Bombay V/s. Supreme General Films Exchange Ltd. reported in A.I.R. 1960 SC 980, the Court had the occasion to consider the right to appeal and held that right to appeal is substantive right and impairing this right by putting new restrictions is not permissible. Enhancing of Court fees to be paid for appeal arising out of a suit decided long before the amendment introducing enhanced Court fees is part of putting a restriction on the right to appeal.
11. The judgment in Supreme General Films Exchange Ltd. was approved in HossseinKasam Dada (India) Limited V/s. State of Madhya Pradesh and Ors. reported in 1983(13) E.L.T. 1277 (S.C.) which held that a pre-existing right of appeal is not destroyed by amendment, unless the amendment is made retrospective with the express words or necessary intent. Mr.Sirdharan further submitted that the pre-existing right to appeal continues to exist, that parties must be given the exercise and enforcement of that right and there can be no question of the amended provision preventing the exercise of that right. It also observed in its concluding portion that until the actual assessment, there can be no lis and, therefore, no right of appeal can accrue before that event.
12. Mr.Mishra, learned counsel for the respondents came out in support of the impugned order and contended that the Appellant has taken advantage of lower rate of duty and has collected higher amounts from customers and that the assessee has utilised the money which was legitimately due to the revenue for several years in the name of pending provisional assessment and resorting to litigations. He submitted that if the assessee has to borrow money, he is required to pay interest thereon and, therefore, supported the impugned order to the effect that pre-deposit of penalty and interest was justified.
13. Section 35F of the Act provides as follows:-
â35F. Deposit, pending appeal, of duty demanded or penalty levied - Where in any appeal under this Chapter, the decision or order appealed against relates to any duty demanded in respect of goods which are not under the control of Central Excise authorities or any penalty levied under this Act, the person desirous of appealing against such decision or order shall, pending the appeal, deposit with the adjudicating authority the duty demanded or the penalty levied:
Provided that where in any particular case, the Commissioner (Appeals) or the Appellate Tribunal is of opinion that the deposit of duty demanded or penalty levied would cause undue hardship to such person, the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal, may dispense with such deposit subject to such conditions as he or it may deem fit to impose so as to safeguard the interests of revenue.
Provided further that where an application is filed before the Commissioner (Appeals) for dispensing with the deposit of duty demanded or penalty levied under the first proviso, the Commissioner (Appeals) shall, where it is possible to do so, decide such application within thirty days from the date of its filing.
14. The section provides any decision of order relates to any duty demanded in respect of goods which are not under the control of the Central Excise authority or any penalty levied, Commissioner (Appeals) or the Appellate Tribunal is the opinion that if the deposit of duty demanded or penalty levied would cause undue hardship to such person, they may dispense with the same and decide such application within thirty days from the date of filing. Explanation to Section 35 specifies the scope of expression 'duty demanded', includes -
(i) amount determined under section 11D;
(ii) amount of erroneous Cenvat credit taken;
(iii) amount payable under rule 57CC of Central Excise Rules, 1944;
(iv) amount payable under rule 6 of Cenvat Credit Rules, 2001 or Cenvat Credit Rules, 2002 or Cenvat Credit Rules, 2004;
(v) interest payable under the provisions of this Act or the rules made thereunder.
15. Although, it includes the provisions of deposit of interest payable under the provisions of the act or the rule, what remains to be considered is whether the assessee is liable to pay interest in accordance with law.
16. Applying the above test to the facts of the present case, we find that the explanation to Section 35F details the expression of âduty demandedâ so as to include any amount determined under section 11D of the Act. Thus, explanation was inserted with effect from 11th May, 2007 by section 131 of the Finance Act, 2007.
17. The test is, therefore, whether section 11D could be invoked in the present case. Section 11D of the Act reads as under:-
â11D. Duties of excise collected from the buyer to be deposited with the Central Government -
(1) Notwithstanding anything to the contrary contained in any order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder, [every person who is liable to pay duty under this Act or the rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or the rules made thereunder from the buyer of such goods] in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government.
[(1A) Every person, who has collected any amount in excess of the duty assessed or determined and paid on any excisable gods or has collected any amount as representing duty of excise on any excisable goods which are wholly exempt or are chargeable to nil rate of duty from any person in any manner, shall forthwith pay the amount so collected to the credit of the Central Government.]
(2) Where any amount is required to be paid to the credit of the Central Government under [sub-section (1) or sub-section (1A), as the case may be,] and which has not been so paid, the Central Excise Officer may serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government.
(3) The Central Excise shall, after considering the representation, if any, made by the person on whom the notice is served under sub-section (2), determine the amount due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.
(4) The amount paid to the Central Government under [subsection of (1) or sub-section (1A) or sub-section (3), as the case may be] shall be adjusted against the duty of excise payable by the person on finalisation of assessment or any other proceeding for determination of the duty of excise relating to the excisable goods referred to in [sub-section (1) and sub-section (1A)] (5) Where any surplus is left after the adjustment under sub-section (4), the amount of such surplus shall either be credited to the Fund or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of section 11B and such person may make an application under that section in such cases within six months from the date of the public notice to be issued by the Assistant Commissioner of Central Excise for the refund of such surplus amount.â
18. It is well settled that a statute is prospective unless it is made retrospective by express or by necessary implication. The provisions of section 11D(1A) as amended do not take effect prior to 10th May, 2008.
19. In the present case, the provisional assessment was made on account of the disputed classification of the product. The relevant date in cases where duty of excise is provisionally assessed is the date of adjustment of duty after the final assessment. As a result Section 11A comes into reckoning only after the final assessment has taken place. If the Central Excise Officer concludes that duty has been short levied, the officer is empowered to take proceedings under section 11A within limitation after issuing show cause notice. Final assessment is a condition precedent for invocation of section 11A.
20. Mr.Sridharan, learned Senior Counsel for the Appellant points out that this legal position is settled beyond doubt in the case of SeraiKella Glass Works V/s. CCE reported in 1997(91) ELT 497 (SC), wherein in paragraph 18, the Supreme Court has held as follows:-
â18. After final assessment, a copy of the order on the return filed by the assessee has to be sent to him. Duty has to be paid by the assessee on the basis of the final assessment within ten days from time from the receipt of the return. No question of giving any notice under Section 11A arises in such case. It is only when even after final assessment and payment of duties, it is found that there has been a short-levy or non-levy of duty, the Excise Officer is empowered to take proceedings under section 11A within the period of limitation after issuing a show cause notice. In such a case, limitation period will run from the date of the final assessment.... â
21. The Appellant has thus pleaded that in the instant case, the final assessment was not completed and the parties proceeded on the basis of provisional assessment pending the challenge to classification of the product under Tariff Item 14F. It is a matter of record that after this Court dismissed Writ Petition No.1460 of 1983 the Hon'ble Supreme Court reversed the said decision and upheld the Petitioners' contention that correct classification was that under Tariff Item 68 in this behalf, the assessee has proceeded on the basis that the goods were cleare on the basis of the provisional assessment. This fact is recorded in the order of this Court in the matter of very same assessee in Writ Petition No.1460 of 1983 decided on 17.9.2002 in 2003 (161) ELT 68 (Bom.) where the Court found it to be the case of unjust enrichment and directed the assessee to pay the duty collected from the customers on principles of analogous to section 11-D. Even when the matter was carried to the Supreme Court in Civil Appeal No.228 of 2003 there is no dispute in the fact that clearance was made on the basis of provisional assessment. This being undisputed position, there is no justification in directing pre-deposit of the interest amount from the day Section 11DD came into effect till payment of differential duty especially in view of the fact that section 35-F of the Central Excise Act does not provide for pre-deposit of the interest demand prior to 11th May, 2007. The impugned order dated 7th October, 2013 is, therefore, uncalled for. Perusal of the impugned order reveals that the tribunal has proceeded on the basis that the order in original relates to assessment during the relevant period.
22. The impugned order in paragraph 5.1 relies upon the judgment in the case of the assessee in Writ Petition No.1460 of 1983 reported as aforestated in 2003 (161) ELT 68 and proceeds to record that the appellant did collect duty liability at 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. That the appellant wanted to enjoy the benefit of duty collected at the higher rate from the customers without remitting the same to the exchequer and therefore the Appellant was liable to discharge interest liability on the duty amount, the tribunal therefore arrived at the prima facie conclusion that the Appellant has not made out a case for the complete waiver of dues adjudged against them and directed the Appellant to remit the interest liability from 14th May, 2003 till the date of which duty liability was discharged.
23. The application for waiver of pre-deposit was hence stayed and was disposed of subject to said pre-deposit which is clearly unsustainable. Placing reliance on the decision of this Court which is Court which was expressly over ruled by the Hon'ble Supreme Court in order to foist interest liability by way of pre-deposit is not justified. The appellant was forced to proceed on the basis of the provisional assessment and to execute bond and pay duty at lower rate in respect of Tariff Item 68 purely as a result of incorrect insistence of the Respondents that the duty was payable under Tariff Item 14F. The Appellant's stand is that Tariff Item 68 has since been upheld by the Supreme Court, there is no justification in insisting upon pre-deposit of the interest amount in the facts of the case. Accordingly, we answer the re-framed question set out in paragraph 9 above in the negative i.e. in favour of the Assessee and against the Respondents and hold that the Tribunal was not correct and justified in directing pre-deposit of the interest amount. Appeal is allowed accordingly by quashing the impugned order dated 7th October, 2013. There will be no order as to costs.