TMI Blog2013 (3) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... c operation of Section 11AB and for recovery of such interest, no show cause notice is required and hence the limitation period prescribed under Section 11A is inapplicable. The interest under Section 11AB on a duty demand confirmed under Section 11A(2) or self-admitted/self-ascertained duty liability under Section 11A(2B) or for delay in payment of duty self-assessed under Rule 6 of Central Excise Rules, 2002 by the due date prescribed under Rule 8 ibid is “sum due to the Government”, which is recoverable under Section 11 of the Central Excise Act, 1944 and for which there is no limitation period. The show cause notices issued in these cases, even if invoking Section 11A, have to be treated as mere communication to the assessee for recovery of interest under Section 11.while the appeals filed by the Revenue are allowed, the appeals filed by the assessee are dismissed. All stay and Misc. applications also stand disposed of. - E/325-326/2010, 1755/2009, 3730 and 3886/2006, 368-372/2010, 2307/2011, 373-374, 468-469/2010, 1478/2011, 473, 528-533, 456, 1059 & 1064/2010 and 732/2011 - A/915-941/2012-EX(BR)(PB) - Dated:- 20-7-2012 - Ajit Bharihoke and Shri Rakesh Kumar,JJ. Shri A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n two cases of M/s. Punjab Tractors Ltd., where the Original Adjudicating Authority had confirmed the interest demands, the orders of the Original Adjudicating Authority, on appeals being filed, were set aside by the Commissioner (Appeals) and against the orders of the Commissioner (Appeals), the Revenue has filed Appeals Nos. E/3730 /2006 and E/3886/2006. 5. In other cases, the interest demands were confirmed by the original adjudicating authorities. In cases adjudicated by Commissioner, appeals have been filed against the Commissioner s orders before this Tribunal. In cases when adjudication was done by officer lower in rank than Commissioner, the appeals were just filed before Commissioner of Central Excise (Appeals) and the orders of the original adjudicating authority were upheld by CCE (Appeals). Against these orders of the CCE (Appeals), the appeals have been filed by the Assessees before the Tribunal. 6. Heard both the sides. 7. While nobody appeared for M/s. UCAL Fuel System Ltd. (Appeal No. E/468/2010), M/s. Rasandik Engg. Industries India Ltd. (Appeal No. E/469/2010), M/s. Hero Cycles Ltd. (E/1755/2009), Shri A.R. Madhav Rao, Advocate, appeared for M/s. Hindustan I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 (272) E.L.T. 136 following Apex Court s judgment in the case of Collector of Customs v. TVS Whirlpool Ltd. (supra) has held that for recovery of interest, the limitation period prescribed for recovery of short-levy, non-levy or erroneously refunded duty as prescribed under Section 11A(1) would apply, that in these cases since the Assessees had paid the duty on the price differential received on their own under intimation to the Department, there is no question of suppression of any information and it is only the normal limitation period of one year from the relevant date which would be applicable and that in view of this, even if it is held that in respect of the duty paid under the supplementary invoices on the price differential amount received, the interest under Section 11AB is also payable, its recovery would be subject to the normal limitation period of one year prescribed under Section 11A of the Central Excise Act, 1944. 7.2 Shri Mayank Garg, Advocate, representing M/s. Dynamic Cables Pvt. Ltd. and M/s. Mangal Electrical Industries Ltd. also raised the same points as those raised by Shri A.R. Madhav Rao, Advocate. 7.3 However, Shri S.K. Pahwa, Advocate, ld. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, who has retained the amount of public exchequer and which ought to have gone in the pocket of the Government much earlier and that the interest on the duty evaded is payable and the same is compulsory, even if no notice has been issued. He pleaded that wherever any duty demand has been upheld against the assessee, the interest liability is automatic and there is no question of issuing issue show cause notice for recovery of interest and hence there is no limitation period for recovery of interest. 9. We have carefully considered the submissions from both the sides and perused the records. 10. In all these cases, the assessees had supplied the goods manufactured by them to their customers against contracts with price variation/price escalation clause. While initially, the duty had had been paid on the provisional price, subsequently, when the price was revised by the assessees upwards with retrospective effect, they issued supplementary invoices for price differential and under those invoices, they also paid excise duty on the price differential. Treating the payment of duty by the Assessees on their own on the price differential received, as payment of short pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from interest chargeable under Section 11AB, 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. What is stated in Explanation 2 to sub-section (2B) is reiterated in section 11AB 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 (2B) of section 11A, 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 mis-statement 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 (11A, 11AA, 11AB 11AC) interest is leviable on delayed or deferred payment of duty for whatever reasons. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act deals with recovery of duty not levied or not paid or short-levied or short-paid. The said section, which stood inserted by Act 25 of 1978, underwent a sea-change when Parliament inserted major changes in that section vide Act 14 of 2001 [with effect from 11th May, 2001] and Act 32 of 2003 [with effect from 14th May, 2003]. It needs to be mentioned that simultaneously Act 14 of 2001 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 2(B) 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 2(B) is reiterated in Section 11AB of the Act, which deals with interest on delayed payment of duty. From the Scheme of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may, as stated above, the Scheme of Section 11A of the Act has since undergone substantial change and, in the circumstances, in our view, the judgment of this Court in the case of M.R.F. Limited [supra] has no application to the facts of this case. In our view, the judgment of this Court in the case of SKF India Limited [supra] is squarely applicable to the facts of this case. 10.1 In our view, the judgments of the Apex Court in the case of CCE v. International Auto Ltd. (supra) and CCE v. SKF (supra) are squarely applicable to the facts of this case. 11. It is contended on behalf of the assessees that price differential on account of price revision from retrospective effect included the element of interest on the amount receivable, which interest as per law is deductible from the assessable value. Ld. Counsels for the assessees submitted that despite the aforesaid legal position, the assessees have paid excise duty on full amount of price differential which included the element of interest. As such, if at all, the assessees are held to be liable to pay the interest on the excise duty on price differential, for the purpose of calculation of excise duty, the interest component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of the Apex Court in the cases of SKF India Ltd. (supra) and CCE v. International Auto Ltd., we hold that the interest under Section 11AB is payable on the duty paid under Section 11A(2B) under supplementary invoice on the price differential on account of retrospective price escalation received by the assessees and if the same has not been paid, the same would be recoverable from the assessees. 13. The next point of dispute is as to whether the recovery of interest would be subject to limitation period prescribed under Section 11A(1) of the Central Excise Act or not. According to the assessees, the recovery of interest is subject to the limitation period prescribed under Section 11A and since there is no suppression of facts on part of the assessees, only normal limitation period of one year would be available. On the other hand, according to the Department, there is no limitation period for recovery of interest. 14. Section 11A of the Central Excise Act, 1944 provides a mechanism for determining the correct duty liability of an assessee when it appears that there has been non-levy, short-levy, short-payment or erroneous refund of duty in case of some assessee and Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not been levied or has been short levied or short paid or erroneously refunded, the person who is liable to pay the duty as determined under Section 11A(2), or has paid the duty under Section 11A(2B), shall, in addition to the duty, be liable to pay interest at a rate fixed by the Central Government by notification, from the 1st day of the month succeeding the month in which the duty ought to have been paid or from the date of erroneous refund, as the case may be, till the date of payment of such duty. Thus once the short-payment, non-payment or erroneous refund of duty has been determined by a proper officer under Section 11A(2) or has been admitted by the assessee under Section 11A(2B), the interest liability under Section 11AB is automatic. 14.4 The question arises as to whether a show cause notice for recovery of interest on duty is required to be issued within the limitation period prescribed in Section 11A, when either- (a) duty liability in respect of non-paid, short paid or erroneously refunded duty, as determined under Section 11A(2) by an order passed by a proper office has been discharged by the assessee, but the interest on duty under Section 11AB has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y liability in cases of the alleged non-payment, short-payment or erroneous refund of duty, whether due to bona fide mistake of the assessee or otherwise and for which a show cause notice is required to be issued within the limitation period of one year or five years, as the case may be, and the recovery action under Section 11 which is for the recovery of the sums to the Government , which is the duty liability already determined by the proper officer or self-ascertained or self-assessed and interest on such duty, if any, chargeable and for which, neither any show cause notice is required nor the limitation period prescribed under Section 11A would be applicable. The question of limitation period for recovery action under Section 11 of the sums due to the Government would arise only if a limitation period has been prescribed in Section 11 for this purpose. But no such limitation period has been prescribed for recovery of sums due to the Government i.e. the arrears of revenue. The limitation period under Section 11A(1) is only for making claim by the Revenue for recovery of duty alleged to be not paid, short paid or erroneously refunded, not for effecting recovery of an adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of amount of tax, a notice in writing before passing the impugned order was necessary which is not shown to have been done in the present case. The impugned order dated 30-7-1990 nowhere states that any notice was sent to the dealer, therefore, such an order could not be sustained. Consequently, the Tribunal has committed an error in passing the impugned order dated 21-7-1998 remanding the matter to the assessing authority. Holding so, the High Court allowed the revision and quashed the order of the Tribunal. 10. In our opinion, the order passed by the High Court is absolutely illegal. 11. In the case of Commissioner of Sales Tax v. Crucible Centre 1993 Suppl. (3) SCC 495, the Commissioner of Sales Tax was the appellant. The appeal was preferred against the judgment of the learned Single Judge of Allahabad High Court allowing the sales tax revision filed by the assessee. After referring to Section 8(1), this court held as under :- According to this section, a dealer shall have to deposit the tax admittedly payable either within the time prescribed or by August 31, 1975 whichever is later. If he fails to do so, simple interest at the rate of 2% per mens rea becomes payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meerut Ors. 1991 Suppl. (2) SCC 612 this court had an occasion to consider the payment of interest on arrears of sales tax. In this case, the assessee contended that he had admittedly paid the entire arrears of sales tax voluntarily and, therefore, they did not become defaulter and not liable to pay interest. Rejecting the said argument, this court held that accrual of interest is automatic and no separate notice of demand was required to be served on that respect. 16.1 When on an admitted excise duty liability, which is voluntarily discharged, interest chargeable by automatic operation of law was not paid, no show cause notice for recovery of interest would be required and, therefore, the limitation period under Section 11A, which is for issue of show cause notice for adjudication of allegation of non-levy, non-payment, short-payment or erroneous refund duty, would not be applicable for recovery of such interest. The question of limitation under Section 11A of Central Excise Act, 1944 for recovery of interest on a confirmed duty demand or an admitted duty liability, is linked with requirement of issuing show cause notice for the same. But in the case of TVS Whirlpool (supra) n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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