TaxTMI 
TaxTMI 
TaxTMI 
2013 (3) TMI 456
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....ovisional assessment in terms of the provisions of Rule 7 of the Central Excise Rules, 2002 and the duty had been paid at the time of clearance on the provisional price. Subsequently, there was upward revision of price from back date and the assessees received the escalation amount from their customers against the supplementary invoices raised by them and at that time, the assessees paid the duty on the price differential. However, while paying duty, they did not pay interest on the same as per provisions of Section 11AB. The department was of the view that since the price had been revised upward from the back date and on account of such upward revision of the price, the appellant had received the differential amount, while paying duty on such price differential, they should also have paid the interest on the duty under the provisions of Section 11AB. Since the assessees in these cases had not paid interest under Section 11AB on the duty paid under the supplementary invoices, the department issued show cause notices for demand of the same. 3. The above show cause notices were adjudicated by the concerned adjudicating authorities from Assistant/Deputy Commissioner to Commissioner. ....
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....at the assessees in these cases have paid duty on the entire amount of price escalation which includes the element of interest, that when the assessees have paid duty on the element of interest, there is no justification for demanding interest for delay in payment of duty in terms of provisions of Section 11AB, that this point has not been considered by the Apex Court in the cases of CCE, Pune v. SKF India Ltd. reported in 2009 (239) E.L.T. 385 (S.C.) and CCE v. International Auto Ltd. reported in 2010 (250) E.L.T. 3 (S.C.), that in any case even if the interest under Section 11AB is held to be payable on the duty paid on the price differential received on account of price escalation, the recovery of the same would be subject to limitation period prescribed for recovery of short-levied, short-paid or erroneously refunded duty under Section 11A of the Central Excise Act, that in this regard, reliance is placed on the Apex Court's judgment in the case of TVS Whirlpool reported in 2010 (119) E.L.T. A177 (S.C.) wherein the Apex Court held that it is only reasonable that period of limitation that applies to a claim for principal amount should also apply to the claim for interest thereon....
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....tands settled by the Apex Court in its judgments in the cases of CCE v. SKF India Ltd. reported in 2009 (239) E.L.T. 385 and CCE v. International Auto reported in 2010 (250) E.L.T. 3 (S.C.), that these judgments of the Apex Court are binding on this Tribunal, that the appellants' plea that the price differential amount on account of upward price revision from back date also includes the element of interest and that the duty had also been paid on the interest, had neither been raised before the adjudicating authorities nor before the first appellate authority and hence the same cannot be raised at this stage, that in any case, this point raised by the appellant has absolutely no relation to the point of dispute, in this case, as to whether interest under Section 11AB would be payable on the differential duty paid on the price escalation amount, received on account of upward price revision from the back date and that so far as the question of limitation is concerned, the Tribunal in the case of SKH Auto Components v. CCE, Delhi-IV reported in 2011 (274) E.L.T. 273 (Tribunal-Delhi) has held that since in the statute no limitation period has been prescribed for recovery of interest, th....
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.... non-levy or short levy, non-payment or short payment or erroneous refund of duty in two categories. One in which the non-payment or short payment etc. of duty is for a reason other than deceit; the default is due to oversight or some mistake and it is not intentional. The second in which the non-payment or short payment etc. of duty is "by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty"; that is to say, it is intentional, deliberate and/or by deceitful means. Naturally, the cases falling in the two groups lead to different consequences and are dealt with differently. Section 11A, however allow the assessees in default in both kinds of cases to make amends, subject of course to certain terms and conditions. The cases where the non-payment or short payment etc. of duty is by reason of fraud collusion etc. are dealt with under sub-section (1A) of section 11A and the cases where the non-payment or short payment of duty is not intentional under sub-section (2B). 10. Sub-section (2B) of section 11A provides that the assessee in default ma....
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.... CESTAT have observed that the Assessee paid the duty on its own accord immediately when the revised rates became known to them from their customers. The differential duty was due at that time i.e. when the revised rates applicable with retrospective effect were learnt by the Assessee, which was much after the clearance of the goods and therefore, question of payment of interest does not arise as the duty was paid as soon as it was learnt that it was payable. Finding that provisions of Section 11A(2) and 11A(2B) were not applicable as the situation occurred in the instant case was quite different, section 11AB(1) was not at all applicable, and therefore, the Assessee was not required to pay interest.' 13. It further held that a case of this nature would not fall in the category where duty of excise was not paid or short-paid. 14. We are unable to subscribe to the view taken by the High Court. It is to be noted that the assessee was able to demand from its customers the balance of the higher prices by virtue of retrospective revision of the prices. It, therefore, follows that at the time of sale the goods carried a higher value and those were cleared, on short payment of duty. The....
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...., hence, interest which is for loss of revenue, becomes leviable under Section 11AB of the Act. In our view, with the entire change in the scheme of recovery of duty under the Act, particularly after insertion of Act 14 of 2001 and Act 32 of 2003, the judgment of this Court in the case of M.R.F. Limited [supra] would not apply. That judgment was on interpretation of Section 11B of the Act, which concerns claim for refund of duty by the assessee. That judgment was in the context of the price list approved on 14th May, 1983. In that case, assessee had made a claim for refund of excise duty on the differential between the price on the date of removal and the reduced price at which tyres were sold. The price was approved by the Government. In that case, the assessee submitted that its price list was approved, by the Government on 14th May, 1983, but subsequent thereto, on account of consumer resistance, the Government of India directed the assessee to roll back the prices to pre-14th May, 1983 level and on that account, price differential arose on the basis of which the assessee claimed refund of excise duty which stood rejected by this Court on the ground that once the assessee had cl....
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.... of provisional price and final price was taken into account since the appellant have withheld the best evidence. In this regard, we are inclined to draw adverse presumption that the interest component on differential between the provisional and final price was not taken into consideration while fixing the final price on the basis of various factors like increase in cost of raw materials, labour charges, etc. We are supported in taking this view by the judgment of the Larger Bench of the Tribunal in the case of CCE v. Supreme Petrochem reported in 2009 (240) E.L.T. 38 (Tribunal-LB), wherein it was held that since the transaction value depends on the contract between the seller and the buyer and the Revenue is not privy to the contract of the sale, in these circumstances, if the seller (assessee) claims certain deductions from the transaction value on account of certain expenses incurred which are not includible in the transaction value, the burden of proving that those expenses were incurred is on the assessee. In this case, if the assessees claim that the price differential on account of retrospective price escalation received by them also included the element of interest, which i....
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....can be recovered as per the provisions of Section 11 for which no further show cause notice is required to be issued. 14.1 Under Section 11A(2B) in the case of non-levy, short-levy, short-payment or erroneous refund of duty, where no fraud, wilful mis-statement, suppression of facts, etc. is involved, if an assessee either on discovering such non-payment, short-payment or erroneous refund of duty himself or on being pointed out by the Department, pays on his own the entire duty along with interest chargeable under Section 11AB, and intimates the payment to the Department, no show cause notice under Section 11A(1) shall be issued to him. In such cases, the assessee himself has accepted his duty liability and if he discharges it on his own alongwith interest under Section 11AB, no show cause notice would be required to be involved. 14.2 Under Rule 8 of the Central Excise Rules, 2002, an assessee is required to pay duty on the clearances of excisable goods made during a month, as self-assessed by him under Rule 6 ibid, by 5th of the next month and if he fails to pay the duty by the due date, he shall be liable to pay interest on outstanding duty at the rate notified under Section 11....
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....overy. Same view has been taken by the Apex Court in its judgments in the cases of - (a) The Sales Tax Officer, Sector-I, Kanpur & Ors. v. M/s. Dwarika Prasad Sheo Karan Dass reported in (1977) 1 SCC-22. (b) Prahlad Rai & Others v. Sales Tax Officer, Meerut - 1991 (Supp) (2) SCC 612; and (c) Haji Lal Mohd. Biri Works v. State of U.P. - (1974) 3 SCC 137. When interest for the period of delay in discharge of duty liability by an assessee, either self-assessed or assessed by the Department, is automatic by operation of the law and for this reason, no show cause notice is required to be issued to the assessee and no adjudication process is required for determining his interest liability, in our view, the limitation period prescribed under Section 11A would not be applicable, as the same is for the issue of show cause notice for adjudication of the allegation of non-payment, short-payment or erroneous refund of duty and determining the duty liability if the allegation is upheld and would not be applicable if no show cause notice is required to be issued. Interest for delay in discharge of duty liability either determined by the Department under Section 11A(2) or self-det....
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....termining the duty liability by an adjudication process, not for recovery under Section 11 of duty demand already determined or self-admitted or self-assessed and interest on such duty liability under Section 11AB, which is by automatic operation of law. 16. In the case of TVS Whirlpool (supra), the Assessee while clearing the goods from bonded warehouse after the expiry of warehousing period, did not pay the interest on duty for the period of delay in clearing the warehoused goods which was chargeable in terms of provisions of Section 61(3) of the Customs Act, 1962 and for this reason, the Department issued a notice to the Assessee for recovery of interest. The Tribunal held the notice to be time-barred holding that for issue of notice for recovery of non-paid interest, the limitation period prescribed under Section 28 of the Customs Act, 1962 for recovery of non-levied, short-levied, short-paid or erroneously refunded duty would apply. The Apex Court vide order dated 7-10-1999 [2000 (119) E.L.T. A177 (S.C.)] upheld the Tribunal's order observing that - "It is only reasonable that the period of limitation that applies to a claim for the principal amount should also apply to the ....
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....aid the tax admittedly payable within the meaning of Section 8(1) inasmuch as he has not calculated and paid the tax at the rate prescribed by law - he must be held to have failed to comply with the requirement of Section 8(1). Accordingly, interest as prescribed by the said section was levied. The appellate authority as well as the Tribunal affirmed the said levy. The matter was carried to the High Court by way of a revision. The learned Judge allowed the revision holding that "there has been no finding by the Tribunal that the assessee acted mala fide in not depositing the tax at the rate of 7%. The demand of interest was not justified." 12. In the case of Salex Tax Officer, Sector-I, Kanpur & Anr. v. M/s. Dwarika Prasad Sheo Karan Dass (1977) 1 SCC-22, this court held that the assessee is liable to pay interest under Section 8(1-A) of the UP Sales Tax Act, 1948 on unpaid amount of tax and such liability arises automatically by operation of law. This court also held that fresh notice of demand was not necessary when amount of tax or other dues reduced as a result of the appeal, revision or other proceedings. 13. This court had occasion to consider sub-section (1-A) of Section 8....
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....- had been upheld against M/s. Kwality Ice Cream Co. by the Assistant Commissioner vide order-in-original dated 6-4-2000 by the way of demand for short paid duty. The order was silent about interest. On appeal, the CCE (Appeals) reduced the duty demand to Rs. 75,16,661/- vide order-in-appeal dated 12-9-2001. The order of the Appellate Authority was also silent about interest. On 10-11-2004, the Department wrote a letter to the assessee demanding an amount of Rs. 24,05,332/- as interest on duty under Section 11AB. Hon'ble High Court relying upon the Apex Court's order in case of TVS Whirlpool (supra) quashed the Department's direction dated 25-10-2004 for payment of interest as time barred in terms of limitation period, prescribed under Section 11A. However, this order does not consider Apex Court's judgment in case of CST, Lucknow v. Kanhai Ram Thekedar (supra), wherein it was held that separate written notice for recovery of interest on sales tax is not required if the interest demand was not included in the assessment order. 17.1 Similarly, Hon'ble Gujarat High Court in case of CCE, Vadodara-II v. Gujarat Narmada Fertilizers Co. Ltd reported in AIT-2012-36-HC = 2012 (285) E.L.T.....