TaxTMI 
TaxTMI 
2015 (1) TMI 1272
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.... the appellant during the period from April 2001 to March 2002, the appellant had paid the differential duty as under : (a) Paid on 30-6-2002 - Rs. 3,01,024.00 (b) Paid on 6-12-2002 - Rs. 1,62,278.00 Total payment Rs. 4,63,302.00 2.1 The above duty payment was made without insistence or notice from the Revenue. There was also no issue of demand notice or confirmation of such notice under Section 11A(2) of the Act for the above differential duty paid by the appellants on their own. On 21-10-2003 a show cause notice was issued for appropriation of the differential duty paid by the appellant and to seek to recovery interest of Rs. 96,342/- besides proposing to impose penalty under Rule 27 of the Central Excise Rules, 2002. Both the lower authorities confirmed the demand of interest and imposed penalty on the appellant. Aggrieved by the said order, the appellant is before us. 3. Heard both sides. 4. The contentions of Shri Prakash Shah, learned Advocate appearing for the appellant are as given below :- (a) The SCN dated 21-10-2003 for recovery of interest is not ....
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....d period of limitation on 21-10-2003 for the demands pertains to the period April, 2001 to March, 2002 and interest sought to be paid by invoking the provision of Section 11A(2B) of the Central Excise Act, 1944. Therefore, the issue before us is whether the appellant is liable to pay interest under Section 11A(2B) of the Central Excise Act, 1944 upon suo motu payment of differential excise duty, prior to issue of show cause notice, when such show cause notice is issued beyond the normal period of limitation without alleging suppression of facts or wilful misstatement. In this case provisions of Section 11A(2B) have been invoked for payment of interest which is reproduced hereinunder :- Section 11A(2B) "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 such info....
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....aced by the appellant on various judgments cited by them is of no avail as the Hon'ble Apex Court's decision prevail over all others. Thus the only issue for decision is whether in the absence of a specific provision prescribing the time limit in the said section, can interest be demanded and recovered without any time limit. 10. A similar issue came up for consideration before the Hon'ble Apex Court in the case of GOI v. Citedal Fine Pharmaceuticals, 1989 (42) E.L.T. 515 (S.C.). In that case the Hon'ble Apex Court held that in the absence of any period of limitation, it was settled that the authority was to exercise the power within a reasonable period. In that case, the Hon'ble Apex Court in para 6 of the judgment, inter alia, held as follows :- "In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant offi....
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....has never disputed this aspect in their appeal memorandum, more particularly, in view of the provisions of Section 11A(2B) of the Central Excise Act, 1944." Thereafter the Hon'ble High Court held that a show cause notice can be issued for the period of limitation and it is reasonable that the period of limitation to claim for the principal amount is to be applied. Admittedly, in this case no allegation of suppression of facts have been alleged against the appellant therefore, demand of interest invoking extended period of limitation is not sustainable. Therefore, we hold that the demand of interest is not sustainable. As the demand of interest is not sustainable as there is no allegation of suppression of facts and mis-statement, therefore, penalty is also not imposable. 8. In these terms, the appeal is allowed with consequential relief, if any. (Pronounced in Court on................) Sd/- (Ashok Jindal) Member (Judicial) 9. [Per : P.K. Jain, Member (T)]. - I have gone through the judgement recorded by my learned brother. In the facts and circumstances of the case my views are at variance to that of my learned brother hence, I am recording a separate....
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....ent in the case of Emco (supra) would be applicable and period of one year from the date of filing the return indicating payment of differential duty would become applicable. However, as it appears no such entries were made in the ER-1 returns, the limitation of one year would not be automatically applicable and the ratio of the judgment in the case of Emco will also not be applicable. It is to be added that depositing an amount in the bank only indicates that certain sum has been deposited to the Government's account for payment of excise duty or interest etc. Such deposit in the bank does not indicate that the said payment is for which month, whether it is for payment of differential duty or for payment of duty liability of that month or for some other purpose say pre-deposit ordered by appellate authority or Court. The Revenue comes to know about these details through monthly returns where the assessee is expected to detail the same. Thus in the absence of these details in the ER-1 returns, it cannot be said that the appellant had informed and the assessing officer was made aware that the differential duty due to reworking of value, etc., has been paid by the appellant. Under th....
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.... may be, after the relevant information, as may be required for finalizing the assessment, is available, but within a period not exceeding six months from the date of the communication of the order issued under sub-rule (1) : Provided that the period specified in this sub-rule may, on sufficient cause being shown and the reasons to be recorded in writing, be extended by the Commissioner of Central Excise for a further period not exceeding six months and by the Chief Commissioner of Central Excise for such further period as he may deem fit. (4) The assessee shall be liable to pay interest on any amount payable to Central Government, consequent to order for final assessment under sub-rule (3), at the rate of twenty four per cent. per annum from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof. (5) Where the assessee is entitled to a refund consequent to order for final assessment under sub-rule (3), subject to sub-rule (6) there shall be paid an interest on such refund at the rate of fifteen per cent. per annum from the first day of the month succeeding the month for which such r....
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....duty. - (1) Where 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), or has paid the duty under sub-section (2B), of Section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below eighteen percent and not exceeding thirty-six percent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of Section 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 dir....
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....ed order of Commissioner (Appeals) is against the ratio of the law declared in the above decision, I set aside the impugned order and allow the revenue's appeal. As the Commissioner (Appeals) has not dealt with the merits of the case, I remand the matter to him for decision on merits." 13. This Tribunal has been holding that no notice is contemplated under Section 11AB of the Central Excise Act, 1944 and therefore no notice is required to be given separately for demand of interest. Hon'ble Supreme Court has also held similar view in the case of Kanhai Ram Thekedar reported in 2005 (185) E.L.T. 3 (S.C.) relating to a Trade Tax case. 14. It is observed that the question whether the interest is required to be paid in a situation where there was a price difference between the date of removal and enhanced price of the goods ultimately sold, the Hon'ble Supreme Court in para 8 in CCE v. International Auto ltd. - 2010 (250) E.L.T. 3 (S.C.) has observed as under :- "8. Section 11A 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 Par....
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.... 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 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. 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 11A of the Act has since undergone substantial change and, in the circumstances, in our view, the judgment of this Court in th....
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....e. Revenue took the matter to the Hon'ble Supreme Court and the Hon'ble Supreme Court dismissed the appeal of the Revenue [2000 (119) E.L.T. A177 (S.C.)] with the following observations :- "It is only reasonable that the period of limitation, that applies, to a claim for the principal amount should also apply to the claim for interest thereon." 16. A combined read of the Hon'ble Supreme Court judgment in the case of Kanhai Ram Thekedar (supra), Citedal Fine Pharmaceuticals (supra) and TVS Whirpool Ltd. (supra) would indicate that no notice for demand of interest is required but if the assessee does not pay the interest normally the demand for interest should be issued within the normal period of limitation. However, if the demand is beyond the period of limitation the relevant officer has to consider the facts and circumstances of the case. In fact the Hon'ble Supreme Court has also observed that no hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case. In the case before us as explained earlier the appellants first of all did not follow the provisional assessment procedure when they were aw....
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....by the learned Advocate is that in the absence of valid demand notice or its confirmation for recovery of interest is bad in law. I find my learned Brother has not given any findings on the said issue. However, it would be seen from the show cause notice that the said show cause notice proposes to appropriate the amount paid by the appellant therefore it cannot be said that there was no valid demand notice or its confirmation. In any case, payment of interest is automatic and does not even require notice. 20. Another issue taken by the learned Advocate is that it is a Revenue neutral situation. The ratio of the Tribunal's decision dated 5-6-2012 by Ahmedabad Bench, in their own case is squarely applicable to this case. The decision of the Hon'ble Supreme Court in the case of International Auto Ltd. (supra) is very clear. The concept of revenue neutrality is not embedded either under Section 11A(2B) or in any other Section or the Central Excise Rules, 1944. The Hon'ble Supreme Court in para 8 which has been reproduced earlier very clearly stated that interest has to be paid under the circumstances. The Fact, in their own case earlier the Tribunal has set aside the demand of ....
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....ed period of limitation can be invoked. In view of this particular situation for demand of interest, Revenue is not required to specifically state the situations enumerated in proviso to Section 11A. It is for the adjudicating authority to decide whether extended period of limitation would be applicable as held by the Hon'ble Supreme Court in the case of Citedal Fine Pharmaceuticals (supra) and detailed in para 8 of the order of Member (Technical)                Or It is necessary even for the demand of interest the Revenue is required to make specific allegations relating to suppression, fraud, willful mis-statement etc. as enumerated in proviso to Section 11A as held by Member (Judicial). 3. As held consistently by this Tribunal and the Hon'ble Supreme Court in the case of Kanhai Ram Thekedar (supra) that no notice is required for demand of interest. In view of the fact that the appellant did not pay interest on its own, the penalty under Rule 27 can be imposed as no separate penalty is specified....
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.... "Section 11AB. Interest on delayed payment of duty. - (1) Where 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), or has paid the duty under sub-section 2(B), of section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent. and not exceeding thirty-six per cent. per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of Section 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 ....
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.... 2011; (iii) Hindustan Insecticides Ltd. [2013 (297) E.L.T. 332]; (iv) Kwality Ice Cream Co. [2012 (281) E.L.T. 507 (Del.) = 2012 (27) S.T.R. 8 (Del.)]; and (v) The Paper Products Ltd. (the appellant) vide order dated M/1291/WZB/AHD/2012, dated 5-7-2012 [2013 (292) E.L.T. 389 (Tribunal)] 25.2 The Revenue on the other hand would contend that Section 11AB which provides for recovery of interest does not lay down any time limits and the interest being a compensatory payment for the delay in payment of duty, the time limit would count from the date of filing of the return giving details of payment of differential duty. Since in the case of payment of differential duty on 6-12-2002, the particulars thereof will be included in the return filed in January, 2003, the show cause notice issued in October, 2003 is within the normal period and hence the demand is sustainable. Revenue places reliance on the following decisions : - (a) International Auto Ltd. [2010 (250) E.L.T. 3 (SC); (b) Chloritech Industries [2014 (306) E.L.T. 447 (Guj)]; ....
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....opies of the said returns. In the absence of any such evidence led by the appellant, it can be safely presumed that the fact of short payment of duty was brought to the notice of the department only in the monthly returns filed after payment of differential duty. In the present case, it is a fact on record that the short payments were made good only on 30-6-2002 and 6-12-2002 and therefore, these details would be available only in the returns filed in July, 2002 and January, 2003. The show cause notice having been issued in October, 2003, the demand in respect of payment made in December, 2002, is clearly within the normal period of limitation of one year and hence, the demand of interest in respect of this payment is clearly sustainable. 25.4 A more or less identical issue came up for consideration before the Hon'ble Apex Court in the case of Commissioner of Central Excise, Vishakhapatnam v. Mehta & Co. - 2011 (264) E.L.T. 481 (S.C.) and the Hon'ble Apex Court held that the cause of action is the date of knowledge. In that case, the question for consideration was whether or not the demand for payment of duty was barred by limitation. In that case, the respondent therein fu....
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.... as I can see, which has been laid down in the said decision is that merely because the provision of a statute does not lay down any time limit, the exercise of power under the said provision cannot be invalidated so long as the power is exercised within a reasonable period. The question whether a party should be put to notice or not before initiating any action was not a question before the Hon'ble Apex Court in the said case. Nowhere in the said decision, the Apex Court even remotely hinted that principles of natural justice need not be followed while initiating executive action. Such an interpretation would give the executive unbridled powers which is an anathema to the principle of rule of law. In the Kanhai Ram Thekedar case decided by the Apex Court, the Apex Court had held that since interest liability accrues automatically, separate written notice is not required for its recovery if it is not included in the assessment order. Therefore, it follows that only in a case where there is an assessment order determining the tax liability, interest would be liable to be recovered since it is consequential to the demand of tax. The said decision nowhere states that in a case where o....
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.... natural justice are not embodied rules. Hence, it was not possible to make an exhaustive catalogue of such rules. Audi alteram partem is a highly effective rule devised by the Courts to ensure that a statutory authority arrives at a just decision and it is calculated to act as a healthy check on the abuse or misuse of power." Therefore, I am in agreement with the view taken by the Hon'ble Member (Judicial) as far this point is concerned. 27. The next point of reference reads as follows:- "3. As held consistently by this Tribunal and the Hon'ble Supreme Court in the case of Kanhai Ram Thekedar (supra) that no notice is required for demand of interest. In view of the fact that the appellant did not pay interest on its own, the penalty under Rule 27 can be imposed as no separate penalty is specified for the said violations as held by Member (Technical)               Or Since demand of interest is not sustainable, no penalty can be imposed as held by Member (Judicial)." 27.1 In the facts of the present case, it is not in dispute that in respect of the goods removed ....
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....f mens rea it is generally sufficient to prove that a default in complying with the statute has occurred." 28. There are two more points mentioned in the reference, wherein only one of the Members, namely, Member (Technical) has given a finding and these are reproduced below : - "5. Appellant has argued that in the absence of valid demand notice or its confirmation for recovery of interest is bad in law. As observed by Member (Technical) that the show cause notice was issued for demanding the amount as also demanding interest and imposition of penalty and under the circumstances, it cannot be said that recovery of interest is bad in law. No finding has been given on this point by Member (Judicial). 6. Whether the appellants contention that it is a revenue neutral situation as held in their own case by the Ahmedabad Bench of this Tribunal does not hold water in view of the Hon'ble Supreme Court's decision in the case of International Auto Ltd. (supra) as held by Member (Technical). No finding has been given on this issue by Member (Judicial)." 28.1 As regards the first point, there is a show cause notice dated 21-10-2003 issued to the appe....