TaxTMI 
TaxTMI 
2008 (12) TMI 632
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....t of duty. These payments (duty and interest) were made by them on their own, as the show cause notice (issued much later) itself admits. The department invoked the provisions of Rule 8(3) (as amended with effect from 1-4-03) and demanded interest @ 2% per month, or Rs. 1000/- per day, whichever is higher, (subject to the maximum of duty in default). The details are as under : Amount of duty (Rs.) Due on Paid on Delay Interest paid (Rs.) Date of payment of interest Interest @ 2% per month (Rs.) 1,67,367 31-3-2003 27-6-2003 88 days 6,600 2-7-2003 9,684 1,54,440 31-3-2003 8-7-2003 99 days 6,500 8-7-2003 10,053 3,21,807 13,100 19,737 Interest @ Rs. 1000/- per day = 99,000 (99 days x 1000 per day) 2.2 Accordingly, the Department felt that the appellant assessee were liable to pay a total interest amount of Rs. 99,000/- (which is the greater of the two amounts shown in the above table i.e. 99,000 and 19,737; both being less than the duty in default) and issued them a show cause notice on 12-12-2006 (i.e. more than three years after the assessee had on their own paid the duties and interests) for the differential interest amount of Rs. 85,900/- (i.e. 99000 less ....
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....h a huge amount of duty (??) demand which prima facie is not sustainable in law" and because of this huge demand they have been "left in the realm of uncertainty". In view of this position as stated by them, they requested for an early hearing. Their request was granted and this office fixed an early hearing for them on 17-12-08 which was intimated to them vide this office letter dated 27-11-08, a copy of which was also sent to the respondent (ACCE, Cossipore Divn.). 3.3 When the case was taken up for hearing on 17-12-08, it was noted that neither side is present for the hearing. The office informed me that the appellants have sent a letter dated 15-12-08. I have seen the said letter which states as under : "In this connection we are sorry to inform you that due to some unavoidable circumstance my lawyer Shri Dimal Kumar Munsi is not available to check up all the documents and to appear before your honour. Hence, you are kindly requested please fix another date." I have considered the above request but I am not able to see any reason as to why I should consider this to be sufficient cause in terms of the provisions of Section 35(1A) of the Central Excise Act, 1944. In fact, I am....
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....f rate of interest is concerned, I find (after some research) that the sub-rule 8(3) as originally forming a part of the CER 2002 [which came into effect from 1-3-2002], read as under (emphasis mine) : If the assessee fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under Section 11AB of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount. The above sub-rule was substituted by the following, vide Notification No. 12/03-C.E. (N.T.), dated 1-3-03 w.e.f. 1-4-2003 (emphasis mine) : If the assessee fails to pay the amount of duty by the due date, he shall be liable to pay the outstanding amount along with an interest at the rate of two per cent per month or rupees one thousand per day, whichever is higher, for the period starting with the first day after due date till the date of actual payment of the outstanding amount : Provided that the total amount of interest payable in terms of this sub-rule shall not exceed the amount of duty which has not been paid ....
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....00/- per day, whichever is higher (subject to the upper limit of duty-in-default vide the proviso thereto). I find that in respect of this version of the sub-rule, the judgment by the Hon'ble Rajasthan High Court in the case of M/s. Lucid Colloids Ltd. v. UOI reported in 2006 (200) E.L.T. 377 which was delivered on 3-8-2005 [and which has been cited by the appellants before the adjudicating authority as also before me], is fully applicable. In the said judgment, after analysing the provisions of the said sub-rule 8(3) and the provisions of Section 11AB of the parent Act i.e. the Central Excise Act, 1944, the Hon'ble Court held as under (emphasis mine): 9. The Legislature in its wisdom has instead of prescribing itself a fix rate, has left it to the Central Government to fix the rate at which such interest is to be charged so that with charging rates of interest, every time Statute is not to be amended but within the limit prescribed, the Central Government may adjust the rate of interest chargeable on delayed payments, making it sure that delayed payment not become profitable on account of charge of interest at rate lower than market rate of interest. 10. The prescription of limi....
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.... invalid. Consequently, interest chargeable on delayed payment had to be only at the rate of 2% per month or for that matter 24% per annum as notified by the State Government in terms of the Section 11BC, which is between the permissible limits in terms of Section 11AB. Consequently, the demand notices are quashed and interest on delayed payment has to be recomputed only to the extent it is referred to the rate of interest @ 2% per month or 24% per annum under Rule 8(3). Accordingly, I find that it is very clear that interest can only be charged at the rate of 2% per month, or 24% per annum (subject to the interest not exceeding the duty amount itself) and not at the rate of Rs. 1000/- per day. It is clear from a holistic reading of the above judgment that the phrase "or Rs. 1000/- per day, whichever is higher" has been struck down since it was found that the rate of Rs. 1000/- per day bore no nexus with the amount of duty-in-default and could lead to situations where such amount was higher than even the upper limit prescribed in the Section 11AB of the parent Act. However, the 2% per month portion remains (as is clear from the last line of para 15 of the judgment), which is the s....
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....is liable to pay interest under Rule 8(3) only at the rate of 2% per month for the months of October, 2003, November, 2003, December, 2003 and January, 2004.' 2. The appellants are said to have already paid interest at the rate of 2% per annum on the duty amount which was paid belatedly. Learned Consultant has produced copies of the relevant challans. It is up to the original authority to verify these documents and be satisfied. 3. In view of the above position, the impugned order demanding interest at the rate of Rs. 1,000/- per day is set aside and this appeal is allowed to the extent of setting aside the above demand and holding that the payment of interest already made at the rate of 24% per annum satisfies the Revenue's demand under Rule 8(3) as sustained by the Hon'ble High Court of Rajasthan." 7.7 In summary, I find that the correct legal position about the rate of interest to be paid in terms of said sub-rule 8(3), during the various "interest-bearing periods" from 1-3-2002 onwards, has been as under : Period Rate as per wording of the sub-rule 8(3) Sub-period Rate as per Section 11AB notification Rate to be charged Remarks 1-3-02 to 31-3-03 the rate specifie....
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....erest amount of Rs. 85900/- under the provisions of sub-rule 8(3), and the same was confirmed by the impugned order, after interpreting the relevant portion of the sub-rule 8(3)i.e. "interest at the rate of two per cent per month or rupees one thousand per day, whichever is higher". However, as discussed earlier, the portion "or rupees one thousand per day, whichever is higher" is no longer valid in view of the cited judgments. It therefore becomes evident that the remaining portion i.e. "interest at the rate of two per cent per month " continues to operate, for the said period when the second version of the sub-rule was in force. Therefore, clearly, the appellants are liable to pay interest at this rate. In fact, I note that they had conceded this before the lower authority vide their reply dated 9-8-2007 wherein at point nos. 8 and 10 they had mentioned as under (quoted verbatim, but emphasis mine) : 8. The Noticee admits that due to ignorance they have paid the interest @ 18% per annum instead 24% per annum resulting short payment of interest amounting to Rs. 6,637/- only instead of Rs. 85,990/- as demanded. 9. xxx (not relevant here) 10. In view of the submissions made herei....
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.... been struck down]. 9.3 Their ground of appeal as reproduced above refers to judgments. I however find that the very judgments cited by them do not support their claim of 13%, and rather rule just to the contrary. 9.4 In the Lucid Colloids case supra, the last para (para 15) of the judgment as reproduced by me earlier, clearly ends by saying as under : ...........interest on delayed payment has to be recomputed only to the extent it is referred to the rate of interest @ 2% per month or 24% per annum under Rule 8(3). The above line does not support their plea for a rate of 13%. 9.5 Similarly, in the case of Automotive India v. CCE, Raipur - 2006 (203) E.L.T. 402 (Tri.-Del.) which the appellants have cited before me, I find that the Hon'ble Tribunal in paras 9.2, 9.3, 9.4 and 11 of their order (dated 22-8-2006), have stated inter alia as under (emphasis mine) : 9.2 ...................This situation does not appear to have been contemplated by Section 11AB (1) of the Act and this portion of the Rule providing for an amount to be recovered at the rate of Rs. 1,000/- per day in cases where the interest amount fails short of the amount when charged at the rate of 2% per month, is c....
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.... appellants were/are liable to pay interest @ 2% per month or 24% per annum, and since they have already paid an amount of Rs. 13,100/- towards interest, they are liable to pay an additional amount of Rs. 6,637/- towards interest (which they had in all fairness conceded before the lower authority). 9.8 Before proceeding to the next point, I may note, with regret, that the appellants have not correctly quoted (in the appeal) what they had stated before the lower authority. I say this for the following reason. I find that in the "STATEMENT OF FACT" forming a part of the appeal book, they have stated the "facts" under Sl. Nos. "A", "B", "C", "D" and "E". Under Sl. No. "C", they have outlined the contents of their reply (to the SCN) as submitted before the lower authority. Thereafter, under the said Sl. No. "C", from point no "1" to point no "8", they have outlined as to what was their submission before the lower authority. On comparing these points with the said actual reply dated 9-8-2007 (which was given before the lower authority) I find that the point nos. 1 to 8 (under the said Sl. No. "C" in the said STATEMENT OF FACT" forming a part of the appeal book) are exactly the same as ....
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....ue for my consideration. I find that the lower authority's order is as under : I further impose an amount of Rs. 10,000.00 towards penalty under the provisions of Rule 25 of Central Excise Rules, 2002 read with Section 11AC of Central Excise Act, 1944 immediately. Against this, the appellants have mentioned only one ground of appeal (which is ground no. 5 on page 7 of their appeal book) which is as under : Since there was no payability of any differential amount of interest in view of the above position of law, the part of the Order-in-Original imposing penalty under Rule 25 cannot but be assailed being void. I find that in so far as their above argument of there being "no payability of any differential amount of interest in view of the above position of law" is concerned, I have already discussed and rejected the same on account of being a new argument, and also on merits. Thus, strictly speaking, I am not required to go any further than this, since the only argument given by them against the penalty, fails. 10.2 However, I find that the proper course of justice would require that I also consider the legality (or otherwise) of the said penalty in view of what they had stated ....
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.... much, much, much before the SCN was issued. 10.6 As regards Rule 25, I find that under the said rule a penalty not exceeding the duty on the goods involved (or Rs. 10,000/-, whichever is greater) can be imposed in the situations mentioned in its four sub-clauses which read as under : (a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under Section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty" Clauses (b) and (c) do not apply to the facts of the case before me. Clause (d) requires contravention of the provisions of the Rules with intent to evade payment of duty. I find that in this case although they have contravened Rule 8(1) (by not paying the duty by the prescribed date) but it is not possible to say that it was with the intent to evade payment of duty....
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....tion of that cheque."; (2) The duty of excise shall be deemed to have been paid for the purposes of these rules on the excisable goods removed in the manner provided under sub-rule (1) and the credit of such duty allowed, as provided by or under any rule. (3) If the assessee fails to pay the amount of duty by the due date, he shall be liable to pay the outstanding amount along with an interest at the rate of two per cent per month or rupees one thousand per day, whichever is higher, for the period starting with the first day after due date till the date of actual payment of the outstanding amount : Provided that the total amount of interest payable in terms of this sub-rule shall not exceed the amount of duty which has not been paid by due date : Provided further that till such time the amount of duty outstanding and the interest payable thereon are not paid, it shall be deemed that the goods in question in respect of which the duty and interest are outstanding, have been cleared without payment of duty, and where such duty and interest are not paid within a period of one month from the due date, the consequences and the penalties as provided in these rules shall follow. (4) T....
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....ned order was passed "violating the principles of judicial discipline causing avoidable harassment to the trade as well as to the Government". I now proceed to examine these submissions. 11.2 On perusal of the appellants' reply before the lower authority and the impugned order passed by him, I find that they had contested the correctness of Department's calculation of interest insofar as it was based on "or Rs. 1000/- per day, whichever is greater" as being invalid in view of the judgments in Lucid Colloids, Condor Power Products and Automotive India, supra. This is duly acknowledged by the lower authority at Sl. Nos. 6 and 7 on pages 3/4 of his order where he has reproduced the appellants' contentions. From these judgments [as already discussed in detail], it is absolutely clear beyond any doubt whatsoever that could arise in even the most pro-revenue mind, that the phrase "or Rs. 1000/- per day, whichever is greater" has been struck down. Despite this, the learned Assistant Commissioner has not at all bothered to comply with the said judgments. He has not even bothered to say as to why he is not following these judgments. His entire discussion/finding/logic (if it could be calle....