TaxTMI 
TaxTMI 
2015 (12) TMI 594
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.... of the removal of the goods. Goods in this manner were supplied during the period January, 2005 to July, 2006 which period is involved in the instant appeal. It so happened that there was an upward revision in the price by the Railways in August, 2006 covering the period in question. On that basis, assessee was paid the price difference on the fixation of enhanced consideration for the goods supplied. The assessee paid the differential duty of Rs. 142.78 crores voluntarily in August, 2006. According to the Revenue/respondent, since the differential duty was paid in August, 2006 and not paid at the time of clearance of the goods, there was delay in paying the differential duty and, therefore, under Section 11AB of the Central Excise Act, 1944 (hereinafter referred to as the 'Act'), the assessee was liable to pay interest on the differential duty amount paid by it. The contention of the Revenue has been upheld by the Authorities below including Custom Excise and Service Tax Appellate Tribunal (hereinafter referred to as the 'Tribunal'). 3. The question, thus, that arises for consideration in these appeals is as to whether interest is leviable under Section 11AB of t....
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....ted as paid on the provisional price and in terms of Rule 7(4) of the Central Excise Rules interest under Section 11AB is payable. The notice also relied on circular dated 28.07.2003 to allege that the assessee is required to pay interest. The notice also proposed to impose penalty under Rule 25 for contravention of Rules 7 and 8 of the Rules. 5. The assessee filed detailed reply dated 17.10.2007 challenging the allegations contained in the show cause ntoice and contending that no interest is payable on the differential duty paid on account of price variation. 6. The Commissioner of Central Excise, Raipur passed order dated 31.10.2007 confirming the amount of interest proposed in the show cause notice and also imposing penalty of Rs. 2,00,000/-. Against the order dated 31.10.2007 passed by the Commissioner of Central Excise, Raipur, assessee filed an appeal before the Tribunal. The Tribunal has passed the impugned order dated 13.08.2010 and dismissed the appeal. This order is challenged by way of instant appeal. 7. It becomes manifest from the aforesaid facts that the assessee had discharged the excise duty on the goods cleared by it on the basis of invoices raised indicating th....
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....on 11A till the date of payment of such duty: Provided that in such cases where the duty becomes payable consequent to issue of an order, instruction or direction by the Board under Section 37B, and such amount of duty payable is voluntarily paid in full, without reserving any right to appeal against such payment at any subsequent stage, within forty-five days from the date of issue of such order, instruction or direction, as the case may be, no interest shall be payable and in other cases the interest shall be payable on the whole of the amount, including the amount already paid. (2) The provisions of sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. Explanation 1. - Where the duty determined to be payable is reduced by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, the interest shall be payable on such reduced amount of duty. Explanation 2. - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, th....
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....he law is to state clearly and unambiguously the obligations of the person whom the law addresses and to spell out plainly and without any confusion the consequences of failure to discharge the obligations cast by the law then the four sections of the Act fall miles short of the desired objective. Even as originally cast the provisions were far from very happily framed and worded. Subjected to amendments from time to time those provisions have now become so complicated that in order to discern their meaning it becomes necessary to read them back and forth several times. 10. We see no reason why the two periods for which interest is leviable may not be put together and dealt with in one consolidated provision instead of being split up in Sections 11-AA and 11-AB. Also, there is much scope to reorganise all the different sub-sections of Section 11-A and to present the scheme of that section in a more coherent and readable form. Be that as it may. In the case in hand we have to deal with the law as it stands now." 13. Thereafter, the Court contrasted the provisions of Section 11A with Section 11AB and some other provisions. It also took note of the judgment of High Court of Bomba....
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....f excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who has paid the duty under sub-section (2-B) of Section 11-A, shall, in addition to the duty, be liable to pay interest.... It is thus to be seen that unlike penalty that is attracted to the category of cases 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", under the scheme of the four Sections (11-A, 11-AA, 11-AB and 11-AC) interest is leviable on delayed or deferred payment of duty for whatever reasons. The payment of differential duty by the assessee at the time of issuance of supplementary invoices to the customers demanding the balance of the revised prices clearly falls under the provision of sub-section (2-B) of Section 11-A of the Act. 15. The Bombay High Court, Aurangabad Bench, in its decision in CCE v. Rucha Engg. (P) Ltd., (First Appeal No. 42 of 2007 decided on 3-4-2007) that was relied upon by the Tribunal for dismissing the Revenue's appeal too....
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....e assessee. Since price difference arose between the price on the date of removal and the enhanced price at which the goods stood ultimately sold, the Department issued show cause notice proposing to levy interest on the differential duty, paid by the assessee, under Section 11-AB of the Act. The assessee took up the defence that prices indicated in the purchase order were final and not liable to change at the time of removal of the goods and, thus, it was not the case of 'short levy' on which interest could be charged. After extensively quoting from the judgment of SKF India Ltd. and following the same, aforesaid contention of the assessee was repelled. In addition, the judgment also contained some further discussion on Section 11AB of the Act which needs to be taken note of. It runs as under: "6. Section 11-A of the Act deals with recovery of duty not levied or not paid or short-levied or short-paid. The said section, which stood inserted by Act 25 of 1978, underwent a sea change when Parliament inserted major changes in that section vide Act 14 of 2001 (with effect from 11-5-2001) and Act 32 of 2003 (with effect from 14-5-2003). It needs to be mentioned that simultaneo....
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....e Government on 14-5-1983, but subsequent thereto, on account of consumer resistance, the Government of India directed the assessee to roll back the prices to pre-14-5-1983 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 cleared the goods on classification, the assessee became liable to payment of duty on the date of removal and subsequent reduction in the prices for whatever reason cannot be made a matter of concern to the Department insofar as the liability to pay excise duty was concerned. 10. In the present case, we are concerned with the imposition of interest which, as stated above, is charged to compensate the Department for loss of revenue. Be that as it may, as stated above, the scheme of Section 11-A of the Act has since undergone substantial change and, in the circumstances, in our view, the judgment of this Court in MRF Ltd. has no application to the facts of this case. In our view, the judgment of this Court in SKF India Ltd. is squarely applicable to the facts of this case." 15. Mr. Lakshmikumaran, who appeared for the a....
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....erential duty at or about the time when revised price was agreed upon by the seller and the buyer. The question, however, is as to whether interest thereon is payable from the date of clearance of goods when duty was paid on the basis of invoice, till the date when differential duty was paid. 19. Starting from the basics, it is axiomatic that interest under Section 11AB can be levied/charged where any duty of excise has not been levied or paid or has been short levied or short paid. In such an event, interest is liable to be paid 'from the first date of the month succeeding the month in which the duty ought to have been paid'. Section 4(1)(a) of the Act provides that the value of the goods shall be the price 'actually paid or payable' for the goods. This means the price which has been 'paid' or 'agreed to be paid' by the buyer of the goods. We find force in the argument of the assessee that the expression 'ought to have been paid' in Section 11AB has to be understood in this light. Thus, for the purposes of Section 11AB, the expression 'ought to have been paid' would mean the time when the price is agreed upon by the seller and the b....
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....when the goods were cleared, there was no certainty that there would be price escalation and it was beyond comprehension to ascertain the exactitude of such an escalation. It would be impossible to expect the assessee to pay the excise duty, at the time of clearance of the goods, on the basis of price escalation that took place at a later date in future. Therefore, as on the date of clearance when excise duty was paid, it could not be treated as 'short paid' on the said date. As a consequence when the principal amount, namely, the excise duty itself was not payable (i.e. on the differential) on the date of clearance of the goods, there cannot be any question of law to pay interest. 22. No doubt, on receipt of differential price, when the buyer agreed to escalation in the price, further excise duty also become payable and on that reckoning one can say that the excise duty originally paid became 'short paid'. However, that would only attract payment on differential excise duty and not the interest thereon. 23. The two judgments in SKF India Ltd. and International Auto are by the same Bench. International Auto follows SKF India Ltd. The primary factor by which the Be....
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....eems to us that the Tribunal's view that the duty is chargeable at the rate and price when the commodity is cleared at the factory gate and not on the price reduced at a subsequent date is unexceptionable. Besides as rightly observed by the Tribunal the subsequent fluctuation in the prices of the commodity can have no relevance whatsoever so far as the liability to pay excise duty is concerned. That being so, even if we assume that the roll back in the price of tyres manufactured by the appellant Company was occasioned on account of the directive issued by the Central Government, that by itself, without anything more, would not entitle the appellant to claim a refund on the price differential unless it is shown that there was some agreement in this behalf with the Government and the latter had agreed to refund the excise duty to the extent of the reduced price. That being so, we see no merit in this appeal brought by the assessee and dismiss the same with no order as to costs." We, thus, are of the view that principle laid down in MRF Ltd. would continue to prevail. 25. Mr. Lakshmikumaran argued, and we find force in this argument, that observations of the Bench in the afore....
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....t in Keshav Mills Company Limited v. Commissioner of Income Tax, Bombay (1965) 2 SCR 908 wherein the Court sounded caution and stated the restraint that has to be exercised while dealing with the question as to whether earlier decisions of this Court should be reconsidered and revised. The Court observed that merely because two views are possible should not be a reason to review the earlier judgment as it was necessary to maintain consistency and depict certainty in law. At the same time, Court made the following remarks: "...That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should not hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions. It would always depend upon several relevant considerations-What is t....