TaxTMI 
TaxTMI 
2011 (9) TMI 709
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....ntention is that the duty paid was not determined under sub-section 2 of Section 11A and as such provisions of Section 11AB are not attracted. However, we find that this contention does not have any merit in view of Tribunal's decision in Gujarat State Fertilizers & Chemicals Ltd. Vs. CCE Vadodara 2007 (82) RLT 510 (CESTAT-Ahmedabad) wherein it was held that even where the duty paid prior to issuance of show cause notice, interest in terms of provisions of Section 11AB is leviable. Further, Section 11AB clearly provides as to whether duty is paid under sub-section 2 or sub-section 2B of Section 11A, interest is leviable. Appellant contend that interest is of return or compensation for the use or retention of another's money. In this case since differential duty paid is available as credit immediately to the Revenue, the entire exercise is revenue neutral. Learned advocate on behalf of the appellant has cited Mitra's legal & Commercial Dictionary, Fifth edition. In support of his contention interest is only compensation and any revenue neutral situation is not chargeable. Further, learned advocate also submitted that whenever the factum of revenue neutrality was accepted by Court, t....
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....hen the appeal papers were placed before Hon'ble President for constitution of Larger Bench, the Hon'ble President ordered as under, which is communicated vide Registrar's letter dt.24.3.08. "The decision in the case of Gujarat State Fertilizers & Chemicals 2007 (82) RLT 510, was by a Division Bench, and therefore binding on the Single Member Bench. Sitting by singly, therefore, the learned Member could not refer the case to Larger Bench, Hence, regret." Thereafter, the matter was discussed with Hon'ble President, who ordered as under which is communicated vide Dy.Registrar's letter dt.14.8.08. "In view of the ratio of the decision of the Supreme Court in Pradip Chandra Parija Vs. Pramod Chandra Patnaik 2002 (144) ELT 7, the matter be listed before the Division Bench. If the D.B. also disagrees from the earlier decision of the D.B. in Gujarat State Fertilizers, 2007 (82) RLT 510, it can be referred to a three-member Larger Bench." In view of the above development, the appeal was heard by Division Bench. After going through the order recorded by my learned brother, I am still of the view that the matter needs to be settled by a Larger Bench. As such, I record a separate order a....
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....ee for holding him back from the possession and enjoyment of the money due to him. In Mitra's Legal and commercial dictionary, Fifth Edition, Interest stand defined. In the wide sense, the same is the return or compensation for the use or retention of another's money. In narrow sense, the word means the amount which one has contracted to pay for the use of borrowed money. In P Ramanatha Aiyar's Advance Law Lenicon, Vol.2 (2005), 3rd Edition, Interest is a consideration paid either for use of money or for forbearance in demanding it, after it has fallen due. It is a compensation allowed by law or fined by parties, or permitted by custom or usage for use of money, belonging to another, or for the delay in paying the money after it has become payable. (Commissioner of Income Tax Vs. Dr.Sham Lal Narula, AIR 1963 Punj. 411, 414 [Land Acquisition Act, (1 of 1894), S.34. 5. The Hon'ble Supreme Court, in Star India Pvt. Ltd. 2006 (1) STR 73 (SC)), though in different context, observed in Para 8 of their judgment observed that the liability to pay interest would only arise on default and is really in the nature of a quasi-punishment. (emphasis provided). Similarly, in the case of M/s Prati....
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....t interpret the statutory provision in such a manner which would create an additional fiscal burden on a person. 9. In the present case, whatever amount was required to be paid by the appellant was immediately earned back as CENVAT credit by their own recipient unit. Thus, by less or late payment, the appellant gets no benefit and conversely the department suffers no loss. In this scenario and in view of forgoing discussion, I find that there is no justification for invoking the provisions of Section 11AB and charging interest. However, I find that the Tribunal in case of Gujarat State Fertilizers & Chemicals 2007 (82) RLT 510 (CESTAT-Ahmedabad), has not accepted the assessee's stand that inasmuch as the principal amount is in effect not going to the Government, being available as credit to the recipient unit, the interest which is only the appendage to the principal is not chargeable, I would like the said issue to be resolved by the Larger Bench. Accordingly, the Registry is directed to place the papers before Hon'ble President for constitution of Larger Bench for consideration of the following issue:- "When the differential duty required to be paid is available as credit to th....
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....rt paid by an assessee is available as credit to the recipient unit of the same assessee, interest in terms of the provisions of Section 11AB required to be confirmed, as observed by Member (Technical) or no interest would be leviable as observed by Member (Judicial), but as there is already a contra decision, the issue is required to be referred to Larger Bench. 3. The ld.Counsel appearing for the appellant submits that the issue involved in this case is regarding interest on the amount of duty that was not discharged due to to dispute regarding correct assessable value. It is his submission that the appellant has been clearing the plastic resins manufactured by them to their other factories situated at Moxi and Nandesari and were calculating the cost of production on the basis of past year's cost data. It is his submission that subsequently it was noticed that the cost or production as per CAS4 was higher. There is no dispute that as such cost of production liability of differential duty arose and was paid and deposited by debiting in RG 23 A Part II. It is his submission that the goods were cleared to their own factory and hence receiving factory cook CENVAT Credit immediately.....
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.... not of revenue neutrality but discharge of correct duty liability in time. He would submit that as per the provisions of Section 11AB, such interest liability arises on the appellant if he has not discharged duty liability in time. He would relied upon the decision of the Hon'ble Supreme Court in the case of Uoi Vs. Ind-Swift Laboratories Ltd. and is the case of CCE Pune Vs. SKF India Ltd 2009 (239) ELT 385 (SC). 5. I have considered the submissions made at length by both sides and perused the records. 6. The undisputed fact in this case is that the appellant had cleared the goods at a value which was worked out by him based upon the data of the cost of production for the earlier period. There is no dispute that the cost of production based upon CAS4, which as per the provisions of Central Excise Valuation Rules, was higher than the value arrived at by appellant. Hence, the differential duty was discharged by the appellant in January 2003. Entire issue in this case is regarding as to whether the appellant is liable to pay interest under Section 11AB of Central Excise Act, 1944 for delayed payment of differential duty. 7. In order to appreciate whether interest liability arises ....