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TMI Blog2015 (7) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty. Thus, in the facts of the present case CESTAT, Kolkata cannot presume that earlier assessment was provisional in nature in absence of any application preferred by the respondent under Rule 7 (1) of Rule, 2002. In view of the aforesaid it has been held by the Hon'ble Supreme Court in the case of Commissioner of Central Excise Vs. International Auto Limited reported in (2010 (1) TMI 151 - SUPREME COURT OF INDIA ) that whenever there is a delayed payment of duty and there is no order for provisional assessment the assessee manufacturer is liable to make payment of the interest upon delayed payment of the duty. In view of aforesaid observations substantial questions of law have been answered accordingly that earlier assessment was never provisional in nature and it cannot be deemed to be provisional in nature as decided by the CESTAT, Kolkata, especially, in absence of any provision in the Central Excise Act 1944. In the Rule 2002 there is bound to be an application for provisional assessment by the manufacturer under Rule 7 (3) and there is bound to be an order passed by the Central Excise for provisional assessment which is not present in the facts of the present case. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest Under Section 11 AB to be read with Rule 7 of Central Excise Rules, 2002. One more show cause notice dated 26/27.7.2004 was given to the effect that interest of ₹ 40,545/has been demanded. Both the show cause notices were adjudicated upon and the order in original was passed by Assistant Commissioner, Central Excise, Division IV Jamshedpur on 7.4.2002. The demand was confirmed as mentioned in both show cause notices against which an Appeal was preferred bearing Appeal No. 193/JSR/CEX/Appeal/2005 which was decided by the Commissioner (Appeal) Customs and Central Excise, Patna vide order dated 06.09.2005 whereby, the Appeal preferred by the respondent was dismissed mainly on the ground that duty paid at a later date from the date of removal of goods and whenever there is a price escalation claimed by the assessee, he ought to have apply for provisional assessment under Rule 7 of the Rule 2002, otherwise, as per Rule 7 (4) also there is provision for taking interest upon late payment of Central Excise Duty. Against the said order an Appeal was preferred by the respondent being Appeal no. ESM391/ 2005 before the Custom Excise and Service Tax Appellate Tribunal, Eastern Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular interval. The respondent paid differential duty much later from the date of removal of goods and, therefore, demand was made about payment of interest as per Section 11 AB of the Central Excise Act, 1944 to be read with Rule 7 (4) of the Central Excise Rules, 2002, but, the same was not paid as such, two show cause notices were issued. On receipt of payment of escalated price the respondent paid the duty at later stage, but, has not paid the interest for which a show cause notice no.1 dated 23.4.2004 has been given, which is as under: Sl. No. Period Differential Amount Duty due on Duty paid on No. of days Amount of interest 1 Sep.03 to Dec,03 126797.76 6th September, 2003 5th January,2004 122 3316.91 2 Jan,01 to June,02 51593.12 21st January, 2001 21st June, 2002 477 6504.6 The second show cause notice dated 26/27th July, 2004 and late payment of Central Excise duty and interest calculated is as under: Sl. No. Period Differential Amount Duty due on Duty paid on No. of days Amount of interest A B C D E F G 1 Aug,03 to May,04 5134221 06th September, 2003 30th June, 2004 299 40545 Rule 7(1) and 7(4) of the Central Excise Rules, 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a provision for payment of interest upon delayed payment of the duty and therefore, even if the respondent would have applied for provisional assessment and such application would have been allowed under Rule 7 (1) of the Rules, 2002, the respondent was liable to make payment of the interest upon Rule 7 (1) and 7 (4) of the Rules, 2002. Thus, in any case i.e. even in the case of provisional assessment and even in the case of normal 6assessment whenever there is a delayed payment of duty, after removal of the goods, the assessee is bound to make payment of interest. 5. It is true that in this Tax Appeal the amount involved is less than 50,000/(Fifty thousand). Nonetheless, price escalation clause in the contract is now a common phenomena. Those who are manufacturing goods and supplying the same to the Government or to the instrumentalities of the Government, there is a Price Escalation Clause. There are chances of getting more price to nullify the effect of increase in the value of inputs. In all such type of cases it ought to be kept in mind that under Section 11 AB to be read with 7 (1) and 7 (4) of the Rules, 2002, if there is delayed payment of the duty the assessee is bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us: "On the facts of that case, however, this Court had held that the payment of duty which was made by the appellants in that case was provisional and the procedure under Rule 9B had been followed. We have not been shown any material on record to indicate whether the appellants in the present case had cleared carbon dioxide manufactured by them by following the procedure laid down in Rule 9B or that the payment of excise duty which the appellants had made during the relevant period was provisional." 12. From the above, it is clear that to establish that the clearances were made on a provisional basis, there should be first of all an order under Rule 9 B of the Rules, and then material to show that the goods were cleared 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 9B empowering the clearances 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 subsection (1). But Explanation 2 to the sub-section 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 erroneously refunded, the person who has paid the duty under subsection (2-B) of Section 11-A, shall, in addition to the duty, be liable to pay interest…. It is thus to be seen that unlike penalty that is attracted to the category of cases in which the non-payment or short-payment, etc. of duty is "by reason of fraud, collusion or any wilful misstate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led an appeal which was allowed and the matter was remanded back to the Assistant Collector by the Collector (Appeals) for de novo consideration. At this stage notice was issued on 4-3-1980 which was within six months of the approval of the classification list i.e. on 17-12-1979. Relying upon a decision of the larger Bench in Rajeev Mardia v. CCE it was held that the assessments from 1-4-1978 till 17-12-1979 the date on which the classification list was approved remained provisional. The larger Bench, in the aforesaid case, held as under: (ELT p. 337, para 6) "6. From the above discussion, we are clear in our mind that Samrat International (P) Ltd. envisage s payment of duty on provisional basis pending decision of classification list or price list. For these payments to be treated as provisional, procedure contemplated by Rule 9-B is not to be followed. Therefore, we are of the considered view that the observation made by the larger Bench of five members that there should be material on record to show that procedure laid down in Rule 9-B was followed for the purpose of showing that the assessments are provisional, cannot hold good in the case of payments of duty effecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 Hindustan National Glass & Industries Ltd. case the impugned order based on the decision of Samrat International cannot be sustained. The assessment framed till the approval of the classification list on 17-12-1979 cannot be treated to be provisional. 15. Admittedly, in the present case, show-cause notice was issued on 4-3-1980 i.e. much beyond the period of six months as provided under sub-rule (1) of Rule 10 of the Rules. Extended period of limitation had not been invoked in the present case. 16. On behalf of the appellant, another point raised before the Tribunal was relating to reworking out the assessable value under Section 4(4)(d)(ii) of the Act. The Tribunal did not permit this argument to be raised as the same had not been raised before either of the authorities below. We are not going into this question in view of our finding that the show-cause notice issued to the appellant was beyond the period of six months and therefore barred by time." (Emphasis Supplied) It has been held by the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 erroneously refunded, the person who has paid the duty under sub-section (2-B) of Section 11-A, shall, in addition to the duty, be liable to pay interest…. It is thus to be seen that unlike penalty that is attracted to the category of cases in which the nonpayment 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', under the scheme of the four Sections (11-A, 11- AA, 11-AB and 11-AC) interest is leviable on delayed or deferred payment of duty for whatever reasons. 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 (2-B) of Section 11-A of the Act. 15. The Bombay High Court, Aurangabad Bench, in its decision in CCE v. RuchaEngg. (P) Ltd., that was relied up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 it clear that such payment would not be exempt from interest chargeable under Section 11-AB of the Act. What is stated in Explanation 2 to sub-section (2-B) is reiterated in Section 11-AB of the Act, which deals with interest on delayed payment of duty. 8. From the scheme of Section 11-A(2-B) and Section 11-AB 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 indicates short-payment/ shor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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