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TMI Blog2014 (11) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing decision of Commissioner of Central Excise v. International Auto Ltd. reported in [2010 (1) TMI 151 - SUPREME COURT OF INDIA], Commissioner of Central Excise, Mysore-I v. J.K. Industries Ltd. reported in [2011 (3) TMI 373 - KARNATAKA HIGH COURT], Cadbury India Ltd. v. Commissioner of Cus. & C. Ex., Pune-I reported in [2008 (11) TMI 62 - CESTAT MUMBAI] and Bharat Heavy Electricals Ltd. v. Commissioner of C. Ex., Bhopal reported in [2011 (6) TMI 396 - CESTAT, DELHI] - Decided against assessee. - E/88236-88237/2013-Mum and E/294/2012-Mum - Final Order Nos. A/33-35/2014-WZB/C-II(EB) - Dated:- 24-1-2014 - Shri S.S. Kang, Vice-President and P.K. Jain, Member (T) Shri Gajendra Jain, Advocate, for the Appellant. Shri B.S. Meena, Additional Commissioner (AR), for the Respondent. ORDER Common issues is involved in all the three appeals and are therefore being taken up together. 2. The appellants are manufacturer of Tyres, Tubes Flaps these finished products are transferred to various distribution centers, sales depots and C F agencies to be sold in the replacement market. At the time of clearance from the factory, appellants are not able to precisely dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pays the duty. This proposition is true whether it is a case of default in payment of duty or provisional assessment or due to short levy or non-levy or for any other reason. The learned A.R. further stated that Rule 7 of the Central Excise Rules, 2002 deals with provisional assessment. Rule 7(4) specifically provides that interest is required to be paid on any amount payable from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof. Learned A.R. further stated that this issue is squarely covered by the Larger Bench decision in the case of Cadbury India Ltd. v. Commissioner of Cus. C. Ex., Pune-I reported in 2008 (232) E.L.T. 224 (Tri.-LB) = 2010 (18) S.T.R. 363 (Tri.-LB). Ld. A.R. further stated that similar view has been taken by the Tribunal in the case of Bharat Heavy Electricals Ltd. v. Commissioner of C. Ex., Bhopal reported in 2012 (275) E.L.T. 614 (Tri.-Del.). Learned A.R. also drew attention to the Hon ble High Court of Karnataka judgment in the case of Commissioner of Central Excise, Mysore-I v. J.K. Industries Ltd. reported in 2011 (268) E.L.T. 168 (Kar.). The same judgment was also followed in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 5th day of the following month, in any other case . Sub-rule (3) of Rule 8 reads as under : (3) If the assessee fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under section 11AB of the Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount . (Emphasis Supplied) Further Rule 7(4) reads as under : (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 specified by the Central Government by notification issued under Section 11AA or Section 11AB of the Act from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof. A combine and harmonious reading of the sub-rule (1) and (3) of Rule 8 and sub-rule (4) of Rule 7 indicate that the underlying principle is that for the goods cleared in a particular month, duty is required to be paid by 5th/6th of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Government, consequent to an order for final assessment under sub-section (2), at the rate fixed by the Central Government under Section 28AB from the first day of the month in which duty is provisionally assessed till the date of payment thereof. It was pleaded that under the Customs Act, the intention of the Government to charge interest from the first day of the month in which the duty is provisionally assessed has been made clear, which is not so in the case of Rule 7(4) of Central Excise Rules, 2002. We are not impressed by this plea of the appellants. They have, while disputing the liability to pay interest from the month for which the assessment was made provisional, have referred to Rule 7(4), which says that an assessee shall be liable to pay interest, consequent to an order for final assessment and, therefore, once the entire amount has been paid before final assessment, the question of payment of interest, consequent to order of final assessment does not arise. However, the learned Counsel has failed to notice that similar wording appear in Section 18(3) of the Customs Act, 1962, which also say that that importer/exporter shall be liable to pay interest on any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2002 have been framed in exercise of the powers conferred under Section 37 of the Central Excise Act, 1944. Sub-section thereof clearly provides that the Central Government may make rules including rules conferring powers to issue Notification with retrospective effect under those rules to carry into effect the purposes of the said Act. Sub-section (2)(ibb) provides that in particular and without prejudice to the generality of the power granted under sub-section of Section 37, such rules may provide for charging of interest on the differential amount of duty which becomes payable or refundable upon finalization of all or any class of provisional assessment. In other words, apart from generality of power enshrined under sub-section (1) of Section 37 of the said Act, sub-section (2)(ibb) of Section 37 specifically provides that the Rules may provide for charging interest on differential amount of duty becoming payable consequent to the finalization of provisional assessment. The provision of law comprised thereunder nowhere specifies such Rules shall restrict the levy of interest for the period consequent to finalization of the assessment. Rather it specifies that the Rules ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the Advocate for the appellants is to be accepted then the expression used in Rule 7(4) would have been in instead of for , with reference to the month following the day on which duty was due . 10. Ld. A.R. has quoted the judgment of Hon ble Supreme Court in the case of Commissioner of Central Excise, Pune v. SKF India Ltd. reported in 2009 (239) E.L.T. 385 (S.C.). The relevant para reads as under :- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001 also made changes to Section 11AB of the Act. In the case of S.K.F. India Limited (supra), it has been, inter alia, held, as can be seen from the above-quoted paragraphs, that sub-section (2B) of Section 11A 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 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 (2B) 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Ld. A.R. has quoted the judgment of Hon ble Karnataka High Court in the case Commissioner of Central Excise, Mysore-I v. J.K. Industries Ltd. reported in 2011 (268) E.L.T. 168 (Kar.). The relevant para reads as under :- 8. In the light of the aforesaid contentions, in order to answer the substantial question of law, it is necessary to look into the provisions in the Act and the Rules. 9. Section 11A of the Act provides for recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. It provides that duty is payable as per the provisions of the Act or Rules made thereunder. The Act by itself will not stipulate the date on which the duty is payable. 10. Rule 8 of the Central Excise Rules, 2002 provides for manner of payment. Sub-rule (1) of Rule 8 provides that duty on the goods removed from the factory or the warehouse during a month shall be paid by the 6th day of the following month if the duty is paid electronically through internet banking and by the 5th day of the following month in any other case. Therefore the said Rule provides for the date on which the duty is paid. If the duty is not paid on the appointed date. Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the passing of the final assessment order. Therefore the liability to pay interest also arises only when the assessee does not pay the duty as determined by the final assessment order. We find it difficult to accept the said interpretation placed by the Tribunal on this provision, namely, Rule 7(4). 14. In fact, sub-section (3) of Section 11A defines the word, relevant date as under : (3)(ii)(C)(b) relevant date , means, - in the case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof . 15. Therefore, the Parliament consciously has not stated that the relevant date on which the adjustment of duty is made is the date of final assessment thereof. In the final assessment, the rate of duty payable is finally determined. That was the duty which was payable by the assessee under Rule 8 on the 6th date of the following month if the duty is paid subsequently through internet banking and on the 5th day of the following month in any other case. Therefore the adjustment of duty is to be made on that date. Not after the determination by the final assessment order. All ..... X X X X Extracts X X X X X X X X Extracts X X X X
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