TaxTMI 
TaxTMI 
2015 (2) TMI 794
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....reported at Ispat Industries - 2010 (259) ELT 662 (Bom.) & Tata Motors - Order dated 1.2.2012 in Central Excise Appeal No.54 of 2011?" 3] Since extensive arguments of both sides have been heard, by consent of parties, we proceed to dispose of these Appeals finally. 4] The facts necessary to appreciate the arguments of the learned Senior Counsel, appearing for the Assessee and the Advocate of the Revenue are that the Appellants engaged themselves, inter alia, in manufacture of tyres, tubes and flaps falling under Chapter Heading 40 to the First Schedule of the Central Excise Tariff Act, 1985. The period relevant for our purpose is April 2010 to March 2011. The Appellant cleared the manufactured goods, to their depot/C & F Agent etc. for subsequent sale in the replacement market and secondly, the original equipment manufacturers or other buyers from the factory gate. 5] They cleared the aforesaid manufactured goods on payment of central excise duty as per the value determined in terms of section 4(1)(a) and section 4(1)(b) of the Central Excise Act. Thus, the Assessee paid the duty on the transaction value/normal transaction value as the case may be. The Assessee has set out....
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....rest liability under Rule 7(4) of the Rules arises only after passing of final assessment order. Therefore, interest can be charged only for the period subsequent to the finalization of the assessment; (ii) The amount of differential duty on which demand of interest is proposed was paid well before the date of finalization of the assessment order; (iii) As per the provisions of section 11AB of the Act read with section 11A(3(ii)(b) of the Act, the relevant date for levying the interest is the date of final assessment. Further, the provisions of section 11AB of the Act shall come into play when the provisional assessment is finalized. Reliance was placed on the decision of the Appellate Tribunal in the case of CCE V/s. Dhariwal Tobacco Products - 2005 (180) ELT 451 (T). (iv) Interest is liable to be paid from the month following the month in which assessments were finalized. In the instant case, they have paid the differential duty before the finalization of the assessments. Therefore, no interest is liable to be paid. Reliance was placed on decision of the Appellate Tribunal in case of MSEB Pole Factor V/s. CCE - 2005 (187) ELT 209(T). 9] The Assessee ....
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....hat the view taken in decision of Ispat Industries by the Tribunal has been approved by this Court inasmuch as the Revenue's Appeal came to be dismissed. If the Revenue's Appeal was dismissed in that case and as well in the case of Ispat Industries, then, the Tribunal seriously erred in law in maintaining the order passed by the Commissioner and the Appellate Authority. In other words, the Assessee's Appeal should have been allowed rather than dismissed by the Tribunal. 14] In support of a further submission and on law that a liability to pay interest arises only if there is a specific provision in a taxing statute, Mr. Sridharan would rely on the Constitution Bench of the Hon'ble Supreme Court in the case of J. K. Synthetics Ltd. V/s. Commercial Taxes Officer reported in (1994) 4 SCC 276 wherein it is held that when a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection o....
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....r appreciation of the rival contentions, we would reproduce Rule 7. Rule 7 of the Central Excise Rules, 2002 and applicable at the relevant time read as under: "RULE 7. Provisional Assessment. - (1) Where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving reasons for payment of duty on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, may order allowing payment of duty on provisional basis at such rate or on such value as may be specified by him. (2) The payment of duty on provisional basis may be allowed, if the assessee executes a bond in the form prescribed by notification by the Board with such surety or security in such amount as the Assistant Commissioner of Central Excise or the Deputy Commis....
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.... the amount of refund, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to ( a) the duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any other person; or (b) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person." 18] That Rule is Entitled "Provisional Assessment". A bare perusal of subrule (1) would indicate as to how in case the Assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving reasons for payment of duty on provisional basis. The provisional duty has, then, to be determined by either of these Commissioners and by passing an order. The crucial words, "may order allowing payment of duty on provisional basis at such rate or on such value as may be specified by him" would indicate further as to how even a provisional assessment has to be made by order of these authorities. This has to fix the rate or value. Thereafter subrule( 2) postulates paym....
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..... manufacture cocoa and chocolate products. The interim products manufactured and captively consumed by them were provisionally assessed for certain periods. The Assessments were finalized by the Assistant Commissioner by four orders. All these details can be obtained from para 2 of the Tribunal's larger Bench decision. Prior to final assessment, the Assessee paid the entire differential duty on their own accord. No further duty was payable on final assessment. However, the Assistant Commissioner, while finalizing the assessment, directed the Range Superintendent to charge interest as applicable and the same was to be charged from the first day of the month succeeding the month for which such amount was determined. The Appellants, namely, Cadbury India Ltd. challenged these orders and were unsuccessful. Then, they approached the Tribunal. There were several Single Member Bench orders of the Tribunal and one decision of the Division Bench of the Tribunal holding that interest, if any, is payable from the first day of the month succeeding the month in which the Assessment is finalized, that is how the two issues or questions in para 7 of the larger Bench order have been framed. The T....
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....terest on any amount payable to the Central makes it clear that even under the Customs Act, the legal liability to pay interest arises consequent to finalization of assessment and not before that. Thus, the provisions of Customs Act in no way, support the plea of the learned counsel of the appellants. The only difference in the Customs Act and the Central Excise Act is that, while under Customs Act, the liability to pay interest arises from the month, in which assessment was made provisional, whereas under the Central Excise Act, the liability to pay interest arises from the first day of the month succeeding the month for which the assessment was finalized. This is in the view of the fact that under the Central Excise Act, the duty liability can be discharged by the 5th of the month following the month in which the goods were cleared, whereas under the Customs Act it has to be discharged before the clearance of the goods. 29. We further note that in the scheme of the Central Excise, the Returns are filed on monthly/quarterly basis and the assessments are made on monthly or quarterly basis. Therefore, the provisional assessment has to be finalized for every month separately....
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....s backdrop that in para 4 of the judgment, the Hon'ble Supreme Court referred to section 11 A which enables recovery of duties not levied or not paid or short levied or short paid or erroneously refunded and interest on delayed payment of duty under section 11AB. 23] That postulates if any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person who is liable to pay duty as determined under sub section (2) of section 11AB or has paid the duty under section 2(B) of section 11A shall in addition to the duty be liable to pay interest at such rate not below at that time, namely, 10% and not exceeding 36%. Incidentally, sub section (2B) of section 11A deals with the cases where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty (on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer) before service of notice on him under sub section(1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of....
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....s 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 failing 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 nonpayment or short payment etc. of duty is by reason of fraud collusion etc. are dealt with under subsection (1A) of Section 11A and the cases where the nonpayment or shortpayment of duty is not intentional under subsection (2B). 10. Sub-section (2B) of Section 11A provides that the assessee in default may, before the notice issued under subsection (1) is served on him, make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and inform the central Excise Officer in writing about the payment made by him and in that event he would not be given the demand notice under subsection (1). But Explanation 2 to the subsection makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11....
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.... 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 clear on short payment of duty. The differential duty was paid only later when the assessee issued supplementary invoices to its customers demanding the balance amounts. Seen thus it was clearly a case of short payment of duty though indeed completely unintended and without any element of deceit etc. The payment of differential duty thus clearly came under subsection (2B) of Section 11A ....
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....ule 7(4) was not in dispute but the time from which it became leviable and payable. The argument that determination was not made was negatived and it was held that the liability to pay duty is finally determined with the passing of the final assessment order is the conclusion of the Tribunal. Therefore, interest is liable to be paid within one month from the date of final assessment order was the conclusion recorded. Therefore, the liability to pay duty is finally determined with the passing of the the final assessment order and also the obligation to pay arises only when the Assessee does not pay the duty as per that order. This conclusion was not upheld by the High Court of Karnataka and in the teeth of the language of Rule 7(4). The observations and findings in para 15 would denote that the High Court of Karnataka held that the date of provisional assessment and the date of final assessment have no relevance in deciding the payment of interest. The date on which duty is payable is provided under the Rules. If the duty determined to be paid under the final assessment is not paid on the due date, if it is short paid, not only the Assessee has to pay the balance duty, he is also li....
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....tion of tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (See Whitney V/s. IRC, CIT V/s. Mahaliram Ramjidas, India United Mills Ltd. V/s. Commissioner of Excess Profits Tax, Bombay and Gursahai Saigal V/s. CIT, Punjab). But it must also be realised that provision by which the authority is empowered to levy and collect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. (See Bengal Nagpur Railway Co. Ltd. V/s. Ruttanji Ramji and Union of India V/s. A. L. Rallia Ram). Our attention was, however, drawn by Mr Sen to two cases. Even in those cases, C....
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..... 3. Perusal of the order of the CESTAT [2007 (209) E. L. T. 280 (Tribunal) shows that in the present case, differential duty was paid prior to the date of final assessment. Interest under Rule 7(4) of the Central Excise Rules, 2002 is payable from the first date of the month succeeding the month for which such amount is determined by the final assessment till the date of payment. Since differential duty was paid even before the final assessment was made, the Tribunal has held that the respondent assessee is not liable to pay interest. In our opinion, no fault can be found with the order of the Tribunal. Accordingly, question raised by the revenue is answered in favour of the assessee and against the revenue. The appeal is disposed of. No. order as to costs." 31] The Revenue carried a Appeal from the order passed in the case of Ispat Industries Ltd. to the Hon'ble Supreme Court but the Special Leave Petition was dismissed. In the case of Tata Motors, the Tribunal once again followed the view taken in Ispat Industries Ltd. and allowed the Assessee's Appeal. 32] In the case of Tata Motors, the provisional assessments were finalized but before finalizing the sam....
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....othing due and payable to the Government, we do not find any justification then to recover interest. If the interest was to be recovered and was indeed payable on the date on which the Assessee made payment of differential duty and prior to finalization of the assessment, then, the Rule would have specifically said so. In the absence of any such stipulation in the Rules the dictum in the decision of the Hon'ble Supreme Court in J.K. Industries Ltd. would apply. If that principle can be applied, then, there was no liability to pay interest. If the liability to pay interest between the time or the period of provisional assessment and payment of differential duty until the final assessment has to be read in the Rule, that is not possible. The interest in this case is not payable merely on equitable considerations. Such being the position, we do not find that the Tribunal was justified in dismissing the Assessee's Appeal. The Tribunal was also not justified in placing reliance upon its larger Bench decision. The larger Bench decision took assistance of the substantive provisions and particularly section 11A and section 11AB of the Act. We have already noted as to how section 11....
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....e of Ispat Industries Ltd. and Tata Motors Ltd." 35] It is unfortunate that the Tribunal ignores and brushes aside even orders of this Court. Had the Tribunal noted the facts in Ispat Industries Ltd. and Tata Motors Ltd. it would have possibly concluded that those orders would bind it in this case. Possibly because it was inclined to follow its larger Bench decision, the facts in Cadbury were more or less identical, yet, it should not have held that this Court's orders are per incuriam. Per Incuriam is a Rule or a principle applicable only when a judgment brushes aside a statutory provision or a binding precedent. The coordinate bench cannot disregard or ignore a binding precedent unless it is found to be contrary to an express statutory provision or refuses to follow a binding decision of the Hon'ble Supreme Court of India or the jurisdictional High Court. In this regard, we would invite the attention of the Tribunal to the following paragraphs in the case of Assistant Collector of Central Excise, West Bengal V/s. Dunlop India Ltd. and Others reported in 1985(19) E.L.T. 22, para 9 and 10 reads as under: "9. We desire to add and as was said in Cassel and Co. Ltd....