TaxTMI 
TaxTMI 
2015 (7) TMI 1078
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....ondent was engaged in manufacturing of prestressed sleeper for Railways and for independent buyers. The respondent-assessee entered into a contract with the Railway and there was a Price Escalation Clause which was to neutralize the effect of increase in the value of inputs. The respondent-assessee received differential value of goods at 2regular interval and paid Central Excise Duty when the calculation is finalized, but, no interest was paid thereupon as required under Rule 7 (4) of Central Excise Rules, 2002 to be read with Section 11AB of Central Excise Act, 1944. The respondent-assessee never gave any declaration that there is a Price Escalation Clause in the contract with the Railway. No declaration was ever given by the respondent that the price at which the goods were sold is not final i.e. the price of the goods declared are provisional and, therefore, the respondent was directed to pay interest on differential duty. The respondent had not paid the interest hence a show cause notice dated 23rd April, 2004 was issued alleging therein that the duty paid at a later date from the date of removal of goods attracts interest Under Section 11 AB to be read with Rule 7 of Central E....
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....What will be the price escalation was not known to the respondent-assessee nor it was certain to get the price escalation. Moreover, the respondent has already paid the differential duty no sooner did the price escalation has been received by the respondent. These aspects of the matter have been properly appreciated by the CESTAT, Kolkata and hence, this Appeal may not be entertained by this Court as no substantial question of law is involved in this Tax appeal even otherwise also the amount involved in this Appeal is less than 50,000/( fifty thousand) so this Appeal may not be entertained by this Court. REASONS: 3. Having heard counsel for both sides and looking to the facts and circumstances of the case, it appears that the respondent is manufacturing Prestressed Sleeper for Railway and for independent buyers. The respondent has entered into a contract with Railway to supply prestressed sleeper having clause of Price Escalation to neutralize the effect of increase in the value of inputs. It further appears from the facts of the case that respondent received differential value of the goods of escalated price at regular interval. The respondent paid differential duty much later ....
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....ng like such deeming provision under the Act or under the Central Excise Act nor under the Rules, 2002. Moreover, the respondent is getting price escalation on different intervals. This price escalation is never automatic. Respondent has to apply price escalation and thereafter he will get the price escalation. Thus, the respondent knows very well that he has to prefer application for price escalation and therefore he should have preferred an application under 7 (1) for provisional assessment, but, the respondent has failed to point out such price escalation nor he had ever applied for provisional assessment. These facts are admitted facts. It is also admitted fact that differential duty was paid at later stage after recovery of the goods. 4. As a cumulative effects of these two facts the respondent is bound to make payment of interest upon delayed payment of differential duty under Section 11 AB of the Central Excise Act. This aspect of the matter has also not been properly appreciated by the CESTAT, Kolkata. Even otherwise also as per Rule 7 (4) even in the case of provisional assessment there is a provision for payment of interest upon delayed payment of the duty and therefore....
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....upra) came to the conclusion that the order of the Assistant Collector could be treated as a provisional order because there was correspondence regarding the excisability and the classification list filed by the appellants. From the above we notice that the majority of the members of the Tribunal based their finding that the clearances made by the appellants during the relevant period was provisional 7in nature mainly because of the finding of this Court in the case of Samrat International (Supra). A perusal of this judgment shows that the said judgment was delivered on the peculiar facts of that case and it does lay down a principle in law which enables the Revenue to treat every classification made by it or the goods removed by virtue of said classification to be treated as the provisional merely because some appeal or other proceeding is pending questioning the classification involved therein. As a matter of fact, this Court in the case of Coastal Gases & Chemicals Pvt. Ltd. V. Asstt. C.C.E., Visakhapatnam (Supra) while considering the judgment in Samrat International Case (Supra) held thus: "On the facts of that case, however, this Court had held that the payment of duty whi....
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....c. 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. 12. Section 11-A, 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 (1-A) of Section 11-A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2-B). 13. Sub-section (2-B) of Section 11-A provides that the assessee-in-default may, before the notice issued under sub-section (1) is served on him, make payment of the unpaid duty on the basis of his own ascert....
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....of the Act. 18. For the reasons discussed above we set aside the judgments and orders passed by the Tribunal and the Commissioner (Appeals). We restore the order passed by the Assistant Commissioner insofar as charge of interest is concerned. On the facts of the present case there is no question of imposition of any penalty. Hence, that part of the order of the Assistant Commissioner is set aside. In the result the appeals are allowed but with no order as to costs. (Emphasis supplied) It has further been held by the Hon'ble Supreme Court in the case of Indian Refrigeration Industries Vs. Commissioner of Central Excise, Delhi reported in (2009) 16 SCC 405 at Paras 11 to 16 which reads as under: "11. As regards the contention that the demand raised was barred by time, it has been held that the classification list filed by the appellant w.e.f. 1-4-1978 was approved by the Assistant Collector on 17-12-1979 in which the benefit of exemption under Notification No. 71/78 claimed by the assessee was denied, against which the appellant filed an appeal which was allowed and the matter was remanded back to the Assistant Collector by the Collector (Appeals) for de novo considerati....
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....were cleared on the basis of the said provisional basis, and payment of duty was also made on the basis of said provisional classification. These facts in the instant case are missing, therefore, in our opinion there is no material in the instant case to establish the fact that either there was a provisional classification or there was an order made under Rule 9-B empowering the clearance on the basis of such provisional classification. In the absence of the same, we cannot accept the argument of the Revenue that in fact the order of the Assistant Collector dated 22- 1-1976 is a provisional order based on which clearance was made by the appellants or that they paid duty on that basis. On the contrary, as held by the judicial member the said order of classification was a final order, therefore, the Revenue cannot contend that the limitation prescribed under Section 11-A does not apply." This decision in Metal Forgings case 3 was approved by a three-Judge Bench of this Court in CCE v. Hindustan National Glass & Industries Ltd. 4 (refer to the observations made in para 18 of the judgment). 14. In view of the subsequent judgments of this Court in Metal Forgings case and Hindust....
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....onditions. 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 (1-A) of Section 11-A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2-B). 13. Sub-section (2-B) of Section 11-A provides that the assessee-in-default may, before the notice issued under sub-section (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 sub-section (1). But Explanation 2 to the subsection makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11-AB, that is, for the period from the first date of the month succeeding the month in which the duty ought to have been paid till the date of payment of the duty. 14. What is stated in Explanation 2 to subsection (2-B) is reiterated in Section 11-AB that states where any duty of excise has not been levied or paid or has been short-levied or short-paid or er....
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....in RuchaEngg. 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 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 (2-B) of Section 11-A and attracted levy of interest under Section 11-AB of the Act." 7. In SKF India Ltd., it has been, inter alia, held, as can be seen from the abovequoted paragraphs, that sub-section (2-B) of Section 11-A provides that the assessee in default may make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and, in that event, such assessee in default would not be served with the demand notice under Section 11-A(1) of the Act. However, Explanation 2 to the sub-section makes ....