Recovery of Duty not paid Section 11A(2B)

[Rajkumar Chandnani]

We are suppling components made to our customer made from dies owned by him and supplied to us. For some of the dies amoortisation issue was settled and we were paying duty on die ammortised cost in our invoice. however in few other dies our issue was open with customer and we were in the process of finalisation. In the mean time excise audit came and this point came up for verification and discussion.We settled the issue with our customer immediatly for pending dies and calulated the details of duty payable on such pending ammortised dies and paid along with interest and also informed Department about such payment. We also wrote letter to AC for avoiding penality and non issue of show cause notice. What is our status after payment of short duty along with interest. Can Dept give shaow cause notice? or leavy penalty ? Can we take benifit of Explanation 3 inserted to Sec 11A(2B) vide finance Act 2010 w.e.f 08.05.2010.

[SANJEEV JADHAV]

As per the provisions of Section 11 A (2B), where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the period, chargeable with duty, may pay the amount of duty before service of notice on him under sub section (1) in respect of duty and inform the Central Excise Officer in writing who, on receipt of such information shall not serve any notice under the sub section (1) in respect of duty so paid; If you have paid duty along with interest and informed the same to department before issue of show cuase, then as per Section 12 A(2B)department can not serve you the SN and the same will not stand against you.

AI Summary

Payment of short duty and interest before notice bars issuance of show cause notice under Section 11A(2B). If an assessee pays duty found to be short, along with interest, and informs the Central Excise Officer before a show cause notice is issued, the officer shall not serve a notice under Section 11A(2B) in respect of the duty so paid; this prevents initiation of notice and related penalty proceedings concerning that paid short duty.