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TMI Blog2006 (9) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... refore issued supplementary invoice amounting to Rs. 8,62,624/- and paid the duty thereon. They did not pay interest for delay in payment of such duty. A show cause notice dated 26-9-2005 was issued to the appellants for demanding interest & imposing penalty. The show cause notice has been decided as mentioned above. Being aggrieved by the said order the appellants have preferred this appeal on the following grounds :- (a) they had discharged the duty liability as per valuation determined and available at the time of clearances of the goods and therefore had discharged the duty liability under Section 3 read with Section 4 of the Central Excise Act 1944 and Rule 8 of the Central Excise Rules, 2002 . (b) as soon as the accounts & balance sheet was finalized and the value was found to be on higher side , they have discharged the duty. Therefore, there was no delay in payment of duty and the question of interest should not be arise. Duty liability arises only after approval of balance sheet and if the duty was not discharged within prescribed period then the interest could have arisen. (c) In terms of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed penalty of Rs. 15,000/- under Rule 25 of Central Excise Rules, 2002. The appeal is directed against this order. The appellant have filed stay petition also. Personal Hearing was held on 15-9-06, when S/Shri Rajendra Khadilkar, Consultant and Sanjay Bhalerao, Sr. Officer Excise attended the hearing. In this case duty was paid before issue of Show Cause Notice. The appellants have citied many case laws according to which if duty is paid before issue of Show Cause Notice then no interest is payable. Duty has already been paid. A prima facie case is made out for waiver of pre-deposit. I therefore take up the main appeal. 5. The appellants have made following submissions - (i) The appellants had discharged the duty liability as per valuation determined and available at the time of clearances of the goods and therefore had discharged the duty liability under Section 3 read with Section 4 of Central Excise Act, 1944 and Rule 8 of Central Excise Rules, 2002. (ii) As soon as accounts and Balance sheets were finalized and the value was found to be on higher side, they have discharged the duty. Therefore there was no delay in payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Nexus Computers Ltd., reported in 2004 (62) RLT 102. (m) Apollo Tyres Ltd., reported in 2001 (134) E.L.T. 679 (T) = 2001 (47) RLT 1. (n) Amritsar Crown Caps reported in 2002 (140) E.L.T. 437 (T) = 2001 (046) RLT 169. 6. Facts in the present case are not in dispute. The case pertains to period after 11-5-2001. The appellants have cleared the excisable goods to their sister units and paid duty in terms of Rule 8 of Valuation Rules 2000. The cost of production was on the basis of CAS 4 of the previous years. On finalisation of the balance sheet for the current year it was found that the value was higher and therefore the appellants issued supplementary invoices and discharged the duty thereon. There is a time gap between the initial payment of duty and discharge of differential duty on account of escalating the price. The department has confirmed the interest and imposed penalty. The appellants are contesting the same. The appellants have raised two main issues - (a) Since at the time of clearances enhanced price was not known and the duty was discharged at the known price and subsequently when higher pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od 28-9-96 to 10-5-01, Section 11AB as it stood prescribed that if in the case of short/non levy/non payment etc. of duty because of fraud, collusion and in which case duty was determined under Section 11A(2), interest as fixed by the Board was also payable 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 such duty. Section 11AC further provided for imposition of equal penalty in the case of suppression of fact etc. 10. It will be seen that for interest under Section 11AB during the period 28-9-96 to 10-5-01, as also for imposition of equal penalty under 11AC, the main ingredient viz suppression of fact, mis-statement were pre-requisite. On 11-5-01, section 11AB was substituted by another new Section 11AB, according to which in all cases (whether involving suppression etc. or not) of non-levy/short payment of duty etc as determined under Section 11A(2) or paid under Section 11A(2B) interest was also payable. 11. Thus it can be seen that in the new Section 11AB pre-requisite of suppression of fact, mis-statement was absent. Besides this, payment of duty under Section 11A(2B) was also brought under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court as reported in 2004 (163) E.L.T. A 53. (ii) Karnataka High Court judgment in the case of Shree Krishna Industries - 2004 (165) E.L.T. 508. In this case the period covered was prior to 11-5-01 and the Hon'ble High Court while making reference to Tribunal Judgment in Rashtriya Ispat Nigam as upheld by Supreme Court held that duty was paid before the issue of Show Cause Notice, penalty under Section 11AC and interest were not justifiable. (iii) The Tribunal's judgment in Machino Montell Ltd., reported in 2004 (168) E.L.T. 466. The Tribunal relied upon the High Court judgment in the case of Shree Krishna Pipe and also CESTAT judgment in the case of Rashtriya Ispat Nigam (as upheld by Supreme Court) and held if duty was paid before the issue of Show Cause Notice Section 11AC and Section 11AB are inapplicable. It is not clear from this order to which period this case pertained. However in para 2 of the said CESTAT order of Machino Montell it is stated that" the revenue on the other hand submitted that when fraud, collusion, wilful mis-statement are alleged against the assessee, penalty under Section 11AC can be invoked irrespective of fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case the Tribunal had upheld the Commissioner (Appeals) order which had set aside the interest on differential duty paid with respect to supplementary invoices. It was observed by the Commissioner (Appeals) that there was no determination of duty under Section 11A(2) and therefore provisions of Section 11AB was not attracted. It may be mentioned that under Section 11AB as it stood prior to 11-5-01 there was a reference to only Section 11A(2) whereas in the Section 11AB as it stands now with effect from 11-5-01 there is a reference of both Section 11A(2) and Section 11A(2)(B). Therefore it is clear that the above decisions will not be applicable for interest recovery under Section 11AB with effect from 11-5-01. Commissioner (Appeals) had also referred to judgments in MRF v. CCE - 1997 (92) E.L.T. 309 (Supreme Court), Eicher Demm - 2002 (140) E.L.T. 227 (Tribunal) and W.S. Industries - 2002 (141) E.L.T. 278 (Tribunal). I find that the MRF case is not relevant because in that case Supreme Court held that fluctuation in prices subsequently will not affect duty liability. Eicher case pertained to period prior to 28-9-96 and therefore not applicable to the present case. In W.S. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B gets attracted for recovery of interest. The department has issued the Show Cause Notice for such recovery of interest. 17. The appellants have raised a point that at the time of initial payment of duty it was impossible for them to anticipate escalation in prices and therefore the alleged delay in payment of differential duty on enhanced value was beyond their control. It should not be regarded as delay warranting payment of interest. I do not agree with the appellants contention. Price escalation is a common phenomena in trade and business i.e. the value at the time of clearance of goods is not final. It is not possible to anticipate the exact quantum of escalation but it is possible to anticipate that there could be escalation. Rule 7 of Central Excise Rules, 2002 dealing with provisional assessment takes care of such a situation. It is open to the appellants to apply for provisional assessment and when the value is correctly known the assessment could be finalized. Rule 7(4) mandates the assessee to pay interest consequent to order for final assessment. It is therefore clear that non payment of interest defeats the purpose and objective of the law. Not paying the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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