2015 (8) TMI 1055

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....e provisional assessment order under Rule 7 of the Central Excise Rules, 2002 (hereinafter referred to as the Rules) issued by the Assistant Commissioner, Central Excise. It is contended that immediately on the approval of the final price, adjustment bills on differential duty, if any, is raised and paid or a refund claim is lodged depending on the price which is fixed. The final assessment is passed thereafter by the excise authorities. For the period 2007-08 and 2008-09, the appellant cleared excisable goods on payment of duty as per the order under Rule 7(1) of the Rules on provisionally assessed value. After the finalisation of the prices, the appellant raised invoices and paid the differential rate of duty and submitted the relevant documents for finalisation of the provisional assessments. It is alleged that the jurisdictional authority, without affording any opportunity, passed the final assessment order holding that even though no further duty was payable but held that the appellant was liable to pay interest on the differential duty under Section 11AB of the Central Excise Act, 1944 (hereinafter referred to as the Act). The appellant, being aggrieved filed an appeal, wh....

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....nces of the instant case, the provision of Section 11A was not applicable. The learned counsel placed reliance upon a decision of the Supreme Court in Assistant Collector of Central Excise, Calcutta Vs. National Tobacco Company of India Ltd., 1978 (2) ELT 416 wherein it was held that the term "levy" seems wider that that of "assessment", yet it does not seem to extend collection. The Supreme Court further held that Article 265 of the Constitution makes a distinction between levy of collection. The learned counsel relied upon the observation made in paragraph 21 to indicate that the process of assessment really determines whether the levy is short and complete, consequently, contended that duty becomes payable only when there is a final assessment and if duty has already been paid on or before the date of final assessment, the question of paying interest on differential right of duty does not arise. In support of his submission, the learned counsel placed reliance upon a decision of the Supreme Court in Commissioner of Central Excise and Customs, Mumbai Vs. I.T.C. Ltd., 2006 (203) ELT 532 wherein it was held that the question as to non-levy or short levy of an excise duty would a....

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....able. On the other hand, Sri Amit Mahajan, the learned counsel for the appellant submitted that interest has been levied in terms of Rule 7(4) of the Rules, which has been framed in exercise of the powers conferred under Section 37 of the Act. In support of his submission, the learned counsel placed reliance upon a decision in Commissioner of Central Excise, Pune Vs. SKF India Ltd., 2009 (239) ELT 385 wherein the Supreme Court held: "We are unable to subscribe to the view taken by the High Court. It is to be noted that: the assessee as 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 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 sub-section (2B) of Section 11A and attracted levy of interest under Section ....

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....charge, quantification and recovery of duty though in certain context it may have a restricted meaning. The Supreme Court in Ujagar Prints Vs. Union of India, 1988 (38) ELT 535 held that the word "levied" means charged as well as assessed. The Supreme Court in Commissioner of Central Excise, Pondichery Vs. Acer India Ltd., 2004 (172) ELT 289 further held that Section 4 of the Central Excise Act, which relates to chargeable of duty at the point of removal of goods cannot override the charging provision, namely, Section 3 of the Act. In our view, there is no quarrel with the aforesaid proposition of law. We however, have to refer to certain provisions of Central Excise Rules, 2002, which have been framed in exercise of the powers conferred by Section 37 of the Central Excise Act, 1944. For facility, Section 37(1) (ibb) of the Act provides as under:- "Section 37. Power of Central Government to make rules. - (1) The Central Government may make rules to carry into effect the purposes of this Act. ........ (ibb) provide for charging or payment of interest on the differential amount of duty which becomes payable or refundable upon finalisation of all or any class of provisi....

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....from the month succeeding the month "for" which such amount is determined. The expression "for" refers to the month for which the amount is determined pursuant to finalisation of assessment. Apparently, it discloses that the interest liability would commence from the month succeeding the day on which the duty was due and payable in relation to the goods cleared. Based on Section 37(2)(ibb), the Rules was framed. Rule 6 of the Rules provided a mode for assessment of duty wherein the assessee himself assessed the duty payable on any excisable goods. Rule 7 of the Rules provided that where the assessee was unable to determine the value excisable goods he may request the Assistant Commissioner or Deputy Commissioner as the case may be for payment of duty on a provisional basis. Provisional assessment order would be passed under sub-Rule (2 )of Rule 7 of the Rules and, thereafter, a final assessment order would be passed under sub-Rule (3). Sub-Rule (4) provides for payment of interest consequent to order for final assessment under sub-Rule (3) at the rate specified from the first day of the month succeeding the month for which such amount is determined till date date of payment ther....