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TMI Blog2022 (7) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 pay an amount equal to the credit availed in respect of such inputs and such rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from Rs.42.76 to Rs.50.66 per Kg and hence Cenvat Credit was short debited /reversed. * When the above was noticed and pointed out, the same was fully re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the inputs received by them. However, at the time of clearance of the said inputs as such, they have short paid the amounts required to be paid by them in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. Rule 3(5) of the Cenvat Credit Rules provides as under:- "When inputs or capital goods, on which CENVAT credit has been tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of non-levy or short levy, non- payment or short payment or erroneous refund of duty in two categories. One in which the non-payment or short payment etc. of duty is for a reason other than deceit; the default is due to oversight or some mistake and it is not intentional. The second in which the non-payment or short payment etc. of duty is "by reason of fraud, collusion or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary 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 Commissioner (Appeals) and the CESTAT have observed that the Assessee paid the duty on its own accord immediately when the revised rates became known to them from their customers. The differential duty was due at that time i.e. when the revised rates applicable with retrospective effect were learnt by the Assessee, which was much after the clearance of the goods and therefore, question of payment of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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 indicates short- payment/short-levy on the date of removal, hence, interest which is for loss of revenue, becomes leviable under Section 11AB of the Act. In our view, with the entire change in the Scheme of recovery of duty under the Act, particularly after insertion of Act 14 of 2001 and Act 32 of 2003, the judgement of this Court in the case of M.R.F. Limited [supra] would not apply. That judgement was on interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 payment can by an assessee of any of the four amounts with which we are more concerned namely, non-levy, non-payment, short-levy or short- payment. Since there is no notice under Section 11A and non- determination of the amount as such pursuant to which the amount is paid it may happen that there may be shortfall in the amount which is paid by the assessee in comparison to what the assessee is legally required to pay. The short payment whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the duty paid at the time of clearance of such inputs. We do not find anything wrong in the same and we uphold the demand on merits. The appellant has submitted a catena of case laws to support that having collected excise duty, Cenvat credit cannot be denied. We observe that Revenue is not denying the Cenvat credit taken. We observe that appellant is working under the self assessment procedure. In the monthly return they have described goods under Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 that the goods are being cleared as such. We therefore, reject the said contention." 4.9 We also note that the appellants were made aware in 2008 about the default in short payment of amount. However, they continued with the practice and have showed a willful intention to not act as per the provisions of Rule 3(5) of the Cenvat Credit Rules. In such situation, invocation of extended period is justified and needs to be upheld. 4.10 In the case of Rajasthan Spinning & Weaving Mills [2009 (238) ELT 3 (SC)], Hon'ble Supreme Court has held as follows:- "17. The ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Central Excise Act, 1944 (in short the "Act') inserted by Finance Act, 1996 with the intention of imposing mandatory penalty on persons who evaded payment of tax should be read to contain mens rea as an essential ingredient and whether there is a scope for levying penalty below the prescribed minimum. Before the Division Bench, stand of the revenue was that said section should be read as penalty for statutory offence and the authority imposing penalty has no discretion in the matter of imposition of penalty and the adjudicating authority in such cases was duty bound to impose penalty equal to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 to establish that the extended period of limitation is applicable. Once that hurdle is crossed by the revenue, the assessee is exposed to penalty and the quantum of penalty is fixed. It is pointed out that even if in some statues mens rea is specifically provided for, so is the limit or imposition of penalty, that is the maximum fixed or the quantum has to be between two limits fixed. In the cases at hand, there is no variable and, therefore, no discretion. It is pointed out that prior to insertion of Section 11AC, Rule 173Q was in vogue in which no mens rea was provided for. It only stated "which he knows or has reason to believe". The said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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