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TMI Blog2015 (11) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... d, as there is no duty involved in this case and it pertains only to interest on delayed payment of differential duty. Therefore, even at the threshold, the said objection is negatived. Show cause notice is issued in terms of Section 8 (1) of the Central Excise Rules and sub-rule (3) of Rule 8 makes it an obligation on the assessee to pay interest on account of delayed payment of duty in terms of the notification issued under Section 11AB of the Central Excise Act. - entire proceedings, in the instant case, is on the basis of the delayed payment of differential duty in terms of Section Rule 8 (1) of the Central Excise Rules, for which interest is leviable under sub-rule (3) of Rule 8 at the rate notified under Section 11AB of the Act. The show cause notice was issued under Rule 8 (1) of the Central Excise Rules, 2002 for failure to pay the duty in terms of Rule 8 (1) and, therefore, liability to pay interest specified under Section 11AB of the Act was mulcted on the assessee in terms of sub-rule (3) of Rule 8. Sub-Rule (3) of Rule 8 provides for quantum of interest, viz., interest as notified in terms of Section 11AB of the Act. However, the Tribunal, without going into the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the same, payments were made, wherein obligation to pay duty arose and, accordingly, the adjudicating authority passed the order demanding interest of ₹ 1,20,662/= under Section 11AB of the Central Excise Act for belated payment of duty and imposed an equal amount of penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act. The relevant portion of the order is extracted hereinbelow for better clarity :- 13. In the case of Spicer India Ltd. reported in 2007 (210) ELT 312 (Commr. Appl.), the Appellate Commissioner has held that Interest - Delay in payment of duty - Valuation arrived at on CAS 4 prepared on basis of previous years financial accounts - Valuation found on higher side when balance sheet for current year finalized, hence, duty paid thereon - Enhanced price becomes correct assessable value ab initio i.e., from date of clearance of goods - Assessee's contention that there was no delay, not correct - Section 11AB of Central Excise Act, 1944. Interest - Delay in payment - Mens rea - Duty paid prior to issuance of show cause notice - Even if duty is paid prior to issue of show cause notice, interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent filed appeal before the Commissioner (Appeals). The Commissioner (Appeals), vide order dated 15.01.2009, confirmed the order of the adjudicating authority. 5. Against the said order, the first respondent/assessee preferred appeal to the Tribunal. The Tribunal, on considering the facts of the case, relying on the decision in the case of CCE, Vadodara - Vs - Chloritech Industries (2009 (235) ELT 17 (Guj.)), allowed the appeal filed by the assessee, against which the appellant/Department has preferred the present appeal. 6. Learned counsel appearing for the appellant/Revenue pleaded that the decision in Chloritech Industries case (supra - 2009 (235 ELT 17) came to be challenged by the Department in appeal before the Supreme Court and the matter was remanded and on remand, the Gujarat High Court, in CCE, Vadodara - Vs - Chloritech Industries (2014 (306) ELT 447 (Guj.)), following the decision of the Supreme Court in Commissioner of Central Excise, Pune - Vs - SKF India Ltd. (2009 (239) ELT 385), allowed the appeal filed by the Revenue. In the light of the above position of law, it is submitted by the learned standing counsel for the Department that the issue in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent from the show cause notice and, therefore, no interest could be demanded invoking the decision of the Supreme Court in SKF India case (supra). 9. Heard the learned standing counsel appearing for the appellant/Revenue and the learned counsel appearing for the respondent/assessee and perused the materials available on record and also the judgments relied on by the learned counsel appearing for the parties. 10. Even before embarking upon deciding the contentions raised by the learned counsel on either side, on merits, it is to be observed that the question of law has been wrongly framed, as rightly pointed out by the learned counsel appearing for the assessee. The decision of the Supreme Court in SKF India case (supra) came to be passed subsequent to the decision of the Tribunal and, therefore, the question of law raised that the Tribunal has not considered the decision in SKF India case (supra) is incorrect. 11. However, before proceeding to venture into the merits of the issue, it would be relevant to decide the preliminary objection raised by the learned counsel for the respondent/assessee. The preliminary objection of the learned counsel for the respondent/assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... threshold, the said objection is negatived. 13. Insofar as the other contentions are concerned, it is admitted by the parties that the decision in Chloritech Industries case (supra - 2009 (235) ELT 17), which has been relied on by the Tribunal to hold in favour of the assessee, has been subsequently reversed by the Gujarat High Court in Chloritech Industries case (supra - 2014 (306) ELT 447) and the appeal was allowed in favour of the Revenue. In the above background, the core issue that falls for consideration in the present appeal is whether on the delayed payment of differential duty, the respondent/assessee is liable to pay interest as provided under sub-rule (3) of Rule 8 at the rate as provided in the Notification issued under Section 11AB of the Act. 14. The Tribunal has held in favour of the assessee relying upon the decision in Chloritech Industries case (supra - 2009 (235) ELT 17), wherein the core issue is as under :- Whether in the facts and circumstances of the case, the Tribunal erred in holding that no interest as prescribed under the provisions of Section 11AB of the Act can be recovered when the differential duty is paid on price variation? 15. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case may be, no interest shall be payable and in other cases the interest shall be payable on the whole of the amount, including the amount already paid. (2) The provision of sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. Explanation 1. - Where the duty determined to be payable is reduced by the Commissioner (Appeals), the Appellate Tribunal National Tax Tribunal or, as the case may be, the Court, the interest shall be payable on such reduced amount of duty. Explanation 2. - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), the Appellate Tribunal National Tax Tribunal or, as the case may be, the Court, the interest shall be payable on such increased or further increased amount of duty. 10. To our mind, facts on material aspects are similar in the present case. It is of course true that a part of the price received by the assessee for the goods sold was based on fluctuating price regime and fluctuated on the basis of factors over which the assessee had no cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sub-rule (3) of Rule 8. Sub-Rule (3) of Rule 8 provides for quantum of interest, viz., interest as notified in terms of Section 11AB of the Act. However, the Tribunal, without going into the factual aspect of the show cause notice, laid emphasis on Chloritech Industries case (supra - 2009 (235) ELT 17) to allow the appeal in favour of the assessee. The Tribunal has not adverted to the merits of the matter and also the relevant provisions of law for levying interest, viz., Rule 8 (3), but decided the issue in the light of the decision in Chloritech Industries case (2009 (235) ELT 17), which has been subsequently reversed in Chloritech Industries case (supra - 2014 (306) ELT 447). 18. The Tribunal has not addressed the issue on merits in relation to the claim of the assessee and merely proceeded on the basis of the decision in Chloritech Industries case (supra - 2009 (235) ELT 17), which does not apply to the facts of the present case, we are inclined to remand the matter back to the Tribunal for re-consideration of the issue in the light of the legal position as above. 19. Accordingly, this appeal is allowed by way of remand to the Tribunal. In the circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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