9911796707
TMI Blog2024 (12) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty was delayed. Demand of interest and penalty - HELD THAT:- Admittedly, the petitioner has been demanded interest and penalty on the excise duty, which the petitioner company has already paid on the basis of an audit report. The same was admittedly paid after due date. While this Court notes that the amount was paid voluntarily before any interest or penalty could have been imposed, show cause notice was required to be given to it to explain the delay as Section 11AA as well as Section 11AC lay down different circumstances wherein the interest would be payable. If the petitioner would have been given an opportunity of hearing, the authorities would have reached to a conclusion whether the duty paid by the petitioner can be said to be delayed or not firstly and secondly whether the same was voluntarily deposited and the benefit was available to it. As per the written submissions filed by the petitioner company, it is apparent that the financial implications identified in audit were required to be placed before the petitioner company and it should have been given an opportunity of hearing and put up its defence whereafter a speaking order was required to be passed. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit report could be only a basis for assessment. Since the assessment order is required to be passed after following the due procedure established under the Excise Act and Rules, at the stage of audit report no recovery proceedings could be initiated. Learned senior counsel also submits that the Superintendent would have no power to issue notices and the order is without jurisdiction. He submits that freezing of the account of the petitioner company is illegal. He, therefore, prays for quashing of the said proceedings. Learned counsel has also relied on Circular dated 19.01.2022 issued by the Central Board of Indirect Taxes and Customs (CBIC) to submit that recovery proceedings could be initiated after demand of interest or penalty on duty is confirmed. It is stated that petitioner is a public utility company and freezing of its accounts would cause financial duress and affect public utility services like CNG and PNG in the geographical area of Gurugram. The petitioner company was unable to deposit the excise duty in time on account of the server being down for a considerable period. The same happened on account of Covid-19 Pandemic. Since no show cause notice was issued to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions. 4. The provisions of Section 11AA of the Act provides for interest on delayed payment of duty, which is as under:- 11AA. Interest on delayed payment of duty. (1) Notwithstanding anything contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder, the person, who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the rate specified in sub-section (2), whether such payment is made voluntarily or after determination of the amount of duty under section 11A. (2) Interest, at such rate not below ten per cent. And not exceeding thirty-six per cent. per annum, as the Central Government may, by notification in the Official Gazette, fix, shall be paid in terms of section 11A after the due date by the person liable to pay duty and such interest shall be calculated from the date on which such duty becomes due up to the date of actual payment of the amount due. (3) Notwithstanding anything contained in sub-section (1), no interest shall be payable where- (a) the duty becomes payable consequent to the issue of an order, instruction or direction by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined under sub-section (10) of section 11A shall also be liable to pay a penalty equal to the duty so determined: PROVIDED that in respect of the cases where the details relating to such transactions are recorded in the specified record for the period beginning with the 8th April, 2011 up to the date on which the Finance Bill, 2015 receives the assent of the President (both days inclusive), the penalty shall be fifty per cent, of the duty so determined; (d) where any duty demanded in a show cause notice and the interest payable thereon under section 11AA, issued in respect of transactions referred to in clause (c), is paid within thirty days of the communication of show cause notice, the amount of penalty liable to be paid by such person shall be fifteen per cent. of the duty demanded, subject to the condition that such reduced penalty is also paid within the period so specified and all proceedings in respect of the said duty, interest and penalty shall be deemed to be concluded; (e) where any duty as determined under sub-section (10) of section 11A and the interest payable thereon under section 11AA in respect of transactions referred to in clause (c) is paid within thirty days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y non-levy, short-levy, non-payment, short-payment or erroneous refund where no show cause notice has been issued before the date on which the Finance Bill, 2015 receives the assent of the President, shall be governed by the provisions of section 11A as amended by the Finance Act, 2015. As per the Excise Act, the authorities are empowered to conduct special audit in terms of Section 14A and in certain circumstances in terms of Section 14AA. Section 14 of the Excise Act empowers the Central Excise Officer to summon any person to give evidence and produce documents in inquiries under this Act. As far as the present case is concerned, the Central Government Audit was being conducted as the Superintendent has communicated about the records to be made available for the said purpose. He, therefore, cannot be said to be unauthorized for issuing letters. After the audit has been conducted, it is found that the petitioner company has voluntarily deposited the excise duty and it was also noticed that payment of duty was delayed. 5. The terms of sub-sections (13) and (14) of Section 11A of the Excise Act provide different circumstances where on the basis of determination of an amount by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited and the benefit was available to it. 7. A bare reading of the complete provisions of recovery of duties under Section 11AA of the Act reflects that the principles of natural justice are inherent and imbibe the same. Therefore, merely on the basis of CAG findings of non-compliance of duty payment timelines and potential interest and penalty demand, it cannot be said that the penalty and interest would be automatic. Any order or action which results in taking away civil rights of an individual would stand vitiated if it violates the principle of audi alteram partem. 8. The Supreme Court in Madhumilan Syntex Private Limited (supra), held as under:- 4. As far as the relevant items in the First Schedule of the Central Excises Act are concerned, it is not necessary to set out the same in detail. It will be enough to point out that if the cellulosic spun yarn made by a manufacturer with the aid of power contains man made fibre of non-cellulosic origin, it will fall under Item No. 18(III) (ii), but if it does not contain any man made fibre of non-cellulosic origin, it will fall under Item No. 18 (III) (i) and duty would be leviable there at a lower rate. The relevant portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken that in cases where urgent and emergent action is required, an opportunity to be heard can be given after the order affecting at person adversely is passed and that where a particular Act does not provide for any such opportunity to be heard being given before an adverse order is passed, a post facto opportunity to be heard might, in certain cases, be regarded as adequate compliance with principles of natural justice. We are of the view these cases have no relevance in considering the questions before us because it is quite apparent that in the present case no urgent or emergent action was required and Section 11A of the Central Excises Act clearly provides that prior show cause notice must be issued to the person against whom any demand on ground of short-levy or non-levy of payment of excise duty is proposed to be made. In Gokak Patel Vokkart Ltd. v. Collector of Central Excise, Belgaum 1987 (28) ELT. 53 (S.C.) ALR. 1987 S.C. 1161 , this Court has held that the provisions of Section 11A (1) and (2) of Central Excises and Salt Act, 1944 make it clear that the statutory scheme is that in the situations covered by sub-section (1), a notice of show cause has to be issued and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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