TaxTMI 
TaxTMI 
2022 (7) TMI 573
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....ber 2010 under Section 11A of Central Excise Act 1944. (ii) I appropriate the amount of Rs. Rs.25,82,527/- already paid by the assessee against the demand above confirmed against short payment. (iii) I order recovery of interest due, at an appropriate rate, on the Central Excise duty recoverable as mentioned in para (i) above, under the provisions Section 11AB of Central Excise Act, 1944. (iv) I impose a penalty of Rs. 25,82,527/- on M/s. LSR Speciality Oils Pvt. Ltd, under the provisions of Section 11AC of the Central Excise Act, 1944." 2.1 Appellants are manufacturer of excisable goods, namely lubricating oils and chemical additives and had cleared the same on payment of duty and availed the benefit of cenvat credit as provided by Cenvat Credit Rules, 2004. 2.2 During the course of scrutiny of records of the appellants, it was observed that the appellants had cleared certain inputs as such declaring lesser assessable value resulting in short payment of duty than the cenvat credit availed on the said inputs. As per Rule 3(5) of Cenvat Credit Rules, 2004 for the removal of inputs on which cenvat credit has been taken, the appellants were required to....
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....als) dismissed the appeal filed by the appellants in this regard. Hence the present appeal. 3.1 We have heard Shri I.C. Thakur, Advocate for the appellants and Shri Sanjay Hasija, Superintendent (Authorised Representative) for the Revenue. 3.2 Arguing for the appellants, learned counsel submits as follows:- • During the year 2006-07 to 2009-10, the Appellant had received Cenvatable inputs and correctly availed Cenvat Credit thereon. These inputs are also cleared as such in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. • When Cenvatable inputs are cleared as such, an amount equivalent to the Cenvat credit availed needs to be reversed at the time of removal under the cover of excise/tax invoice issued. • The appellant, while raising the sales order or delivery order for the removal of such Inputs as such, had by mistake or through an error calculated lower assessable/selling price or selling rate which resulted in selling the inputs at lower value and thereby reversal of Cenvat Credit at lower value. The initial Invoices raised at the rate of Rs.22.50 per Kg as against the actual price and assessable value of said inputs ranging fro....
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....ay interest as per the section 11AB will trigger in. • This is clearly a case of short payment of the amounts at the time of removal of the inputs against which CENVAT Credit has been taken as such, in contravention of the provisions of Rule 3 (5) of the CENVAT Credit Rules, 2004. • It is not the case of a single instance but appellant continuously defaulted over the entire period. They continued with the practice of making short payment even after being pointed out by audit. Therefore they deliberately short paid contravening the provisions of Rule 3 (5) of the CENVAT Credit Rules, 2004. Accordingly the invocation of extended period and penalty imposed on the appellant cannot be faulted with. • the issue involved in the present case is squarely covered by the decision of the Tribunal in the case of LSR Speciality Oil P. Ltd. [2015 (324) ELT 582 (Tri.-Mumbai). He therefore prays for dismissal of the appeal. 4.1 We have considered the impugned order along with the submissions made in the appeal and during the course of argument. 4.2 In the present case undisputedly the appellants have availed the cenvat credit as was admissible to them on....
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....earance of the goods. The case of short payment of the amounts at the time of clearance of goods is akin to the case of short payment of duty on the goods of own manufacture when cleared by the appellants. Such cases need to be handled accordingly. It has been held by the Hon'ble Apex Court that in the case of short payment of duty at the time of clearance of the goods, the liability to pay interest on the same shall be absolute and there can be no denial of the same. Reference is made to the decision of the Hon'ble Apex Court in the case of International Auto Ltd. [2010 (250) ELT 3 (SC)] and Steel Authority of India Ltd. [2019 (366) ELT 769 (SC)]. 4.6 In the case of International Auto Ltd., Hon'ble Supreme Court has held as follows:- "7. We find no merit in the submissions advanced on behalf of the assessee. The controversy arising in this civil appeal is squarely covered by the judgement of this Court in the case of Commissioner of Central Excise, Pune v. SKF India Limited, reported in 2009 (239) E.L.T. 385. We quote hereinbelow relevant observations made in the case of SKF India Limited [supra], which reads as follows : "9. Section 11A puts the cases o....
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....ement 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 (11A, 11AA, 11AB & 11AC) interest is leviable on delayed or deferred payment of duty for whatever reasons. 11. 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 (2B) of section 11A of the Act. 12. The Bombay High Court, Aurangabad Bench, in its decision in The Commissioner of Central Excise, Aurangabad v. M/s Rucha Engineering Pvt. Ltd., (First Appeal No. 42 of 2007) that was relied upon by the Tribunal for dismissing the Revenue's appeal took the view that there would be no application of Section 11A(2B) or section 11AB where differential duty was paid by the assessee as soon as it came to learn about the upward revision of prices of goods sold earlier. In M/s. Rucha Engineering the High Court observed as follows : 'It is evident that the Section (11AB) comes into play if the duty paid/levied is short. Both, the ....
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....tainment 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 11A(1) of the Act. However, Explanation (2) to the sub-section makes it clear that such payment would not be exempt from interest chargeable under Section 11AB of the Act. What is stated in Explanation (2) to sub-section 2(B) is reiterated in Section 11AB of the Act, which deals with interest on delayed payment of duty. From the Scheme of Section 11A(2B) and Section 11AB of the Act, it becomes clear that interest is levied for loss of revenue on any count. In the present case, one fact remains undisputed, namely, accrual of price differential. What does differential price signify? It signifies that value, which is the function of the price, on the date of removal/clearance of the goods was not correct. That, it was understated. Therefore, the price indicated by the supplementary invoice is directly relatable to the value of the goods on the date of clearance, hence, enhanced duty. This enhanced duty is on the corrected value of the goods on the date of removal. When the differential duty is paid after the date of clearance, it ....
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.... for payment of interest in a fiscal statute, interest cannot be demanded, we would think in the context of the Act and the Rules in question, under Section 11AB, particularly, when there is no dispute relating to liability to pay the differential duty and we notice that absence of dispute is a fair acknowledgement of the fact that the facts of the present cases are unlike the situation in MRF decision where the price was fixed at the time of removal, interest is payable as provided in Section 11AB and from the point of time indicated therein. But in these cases, the price was variable under the escalation clause which was very much within the knowledge of the assessee and the demand for interest is sustainable. 62. As far as the scope of the second explanation of Section 11A(2)(b) is concerned, it contemplates payment voluntarily by the assessee. It is without any notice being issued under Section 11A. There is also reference to liability on the part of the assessee to pay interest under Section 11A(2)(b), not only on the amount which is paid within the meaning of Section 11A(2)(b) but on any short payment as may be determined by the excise officer. This only means that p....
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....ould think that while the principle that the value of the goods at the time of removal is to reign supreme, in a case where the price is provisional and subject to variation and when it is varied retrospectively it will be the price even at the time of removal. The fact that it is known, later cannot detract from the fact, that the later discovered price would not be value at the time of removal. Most significantly, Section 11A and Section 11AB as it stood at the relevant time did not provide read with the rules any other point of time when the amount of duty could be said to be payable and so equally the interest. We would concur with the views expressed in SKF case (supra) and International Auto (supra). We find no merit in the appeals. The appeals will stand dismissed." 4.8 We find that in the case of LSR Speciality Oil P. Ltd. (supra) in similar circumstances the Tribunal has held as follows:- "6. We also note that the revenue is not denying the credit taken by the appellant. All that revenue is asking the appellant is to pay the differential amount i.e. the difference between the Cenvat credit taken at the time of importation/receiving of inputs minus t....
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.... 5 0 60 From the above columns, it is very clear that nobody can make out that the credit on inputs taken are falling under Chapter 39. Further, while clearing the goods no description is mentioned and the classification of the goods mentioned is 38. It is not possible from the above description for any human being that the inputs have been cleared as such and the classification of the input have been Changed. We do not see any reason for the appellant to change the classification. To our mind, the classification has been changed only to ensure that they are in a position to take higher credit and pay lower duty. In our view, there is clear cut suppression of fact and wilful misstatement and in view of the fact and circumstances, extended period of limitation is correctly invoked. Ld. counsel has submitted that as per CBEC manual, ER1 return are required to be scrutinised. On query from the Bench whether any details have been asked during any scrutiny, and they have submitted the manufacturing process or informed in detail of the activity, the answer was negative. Nobody on the basis of ER1 return filed by the appellant can make out th....
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....t penalty under Section 11AC, as the word suggests, is punishment for an act of deliberate deception by the assessee with the intent to evade duty by adopting any of the means mentioned in the section. 20. At this stage, we need to examine the recent decision of this Court in Dharamendra Textile (supra). In almost every case relating to penalty, the decision is referred to on behalf of the Revenue as if it laid down that in every case of non-payment or short payment of duty the penalty clause would automatically get attracted and the authority had no discretion in the matter. One of us (Aftab Alam, J.) was a party to the decision in Dharamendra Textile and we see no reason to understand or read that decision in that manner. In Dharamendra Textile the court framed the issues before it, in paragraph 2 of the decision, as follows : "2. A Division Bench of this Court has referred the controversy involved in these appeals to a larger Bench doubting the correctness of the view expressed in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai & Anr. [2007 (8) SCALE 304]. The question which arises for determination in all these appeals is whether Section 11AC of th....
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.... in Dharamendra Textile can be said to hold that Section 11AC would apply to every case of non-payment or short payment of duty regardless of the conditions expressly mentioned in the section for its application. 22. There is another very strong reason for holding that Dharamendra Textile could not have interpreted Section 11AC in the manner as suggested because in that case that was not even the stand of the revenue. In paragraph 5 of the decision the court noted the submission made on behalf of the revenue as follows : "5. Mr. Chandrashekharan, Additional Solicitor General submitted that in Rules 96ZQ and 96ZO there is no reference to any mens rea as in section 11AC where mens rea is prescribed statutorily. This is clear from the extended period of limitation permissible under Section 11A of the Act. It is in essence submitted that the penalty is for statutory offence. It is pointed out that the proviso to Section 11A deals with the time for initiation of action. Section 11AC is only a mechanism for computation and the quantum of penalty. It is stated that the consequences of fraud etc. relate to the extended period of limitation and the onus is on the revenue t....