TMI Blog2014 (10) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... If the object of the law is to state clearly and unambiguously the obligations of the person whom the law addresses and to spell out plainly and without any confusion the consequences of failure to discharge the obligations cast by the law then the four sections of the Act fall miles short of the desired objective. Even as originally cast the provisions were far from very happily framed and worded. Subjected to amendments from time to time those provisions have now become so complicated that in order to discern their meaning it becomes necessary to read them back and forth several times. We see no reason why the two periods for which interest is leviable may not be put together and dealt with in one consolidated provision instead of being split up in sections 11AA and 11AB. Also, there is much scope to reorganise all the different subsections of section 11A and to present the scheme of that section in a more coherent and readable form. Section 11AA of the Act, which came into effect from 8.4.2011, will have no bearing to the facts of the present case. In any event, the decision of the Supreme Court in SKF India Ltd. case, referred supra, squarely applies to the period in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id soon after the order of amendment was received from the customer and, therefore, there is no delay in payment of differential duty. 4.3. The Department, after receipt of the differential duty based on supplementary invoices, issued nine show cause notices demanding an amount of ₹ 6,26,667/- towards interest under Section 11AB of the Central Excise Act, 1944 (for brevity, the Act) and an amount of ₹ 62,000/- towards penalty for the period from December, 2009 to March, 2011. 4.4. In response to the said notices, detailed replies were submitted by the assessee stating that only on account of supplementary invoice, duty was paid and, therefore, the question of demanding interest under Section 11AB of the Act does not arise. The assessee placed reliance on a decision of the Karnataka High Court in Commissioner of Central Excise v. Bharat Heavy Electricals Ltd., 2010 (257) ELT 369 (Kar.) and tried to distinguish the decision of the Supreme Court in Commissioner of Central Excise v. SKF India Ltd., 2009 (239) ELT 385 (SC). 4.5. However, the Original Authority, followed the decision of the Supreme Court in SKF India Ltd. case, referred supra, and held that interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is partly allowed. The stay application is disposed of. 4.8. Aggrieved by the order passed by the Tribunal, the assessee has filed the appeal raising the following substantial questions of law: (1) Whether in the facts and circumstances of the case, the appellant is liable to pay interest under Section 11AB of the Act, on raising of supplementary invoice? (2) Whether in the facts and circumstances of the case, the first respondent is correct in ignoring the decision of the Karnataka High Court in BHEL, especially when the departmental appeal against the said decision has been dismissed by the Supreme Court? 5. The assessee in C.M.A.Nos.1990 to 1993 of 2014 and C.M.A.Nos.475 to 478 of 2012 are also similarly placed. In C.M.A.Nos.1990 to 1993 of 2014, the assessee has raised the very same substantial questions of law, referred supra. However, C.M.A.Nos.475 to 478 of 2012 were admitted on the following substantial questions of law: (1) Whether in the facts and circumstances of the case, the appellant is liable to pay interest under Section 11AB of the Act, on raising of supplementary invoice? (2) Whether in the facts and circumstances of the case, the first responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore adverting to the merits of the case, it would be relevant to refer to Sections 11A(1), 11A(2B) and 11AB of the Act, which read as under: Section 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the duty as determined under the sub-section (2), or has paid the duty under sub-section (2B), of section 11A shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and not exceeding thirty six per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section 11A till the date of payment of such duty: Provided that in such cases where the duty becomes payable consequent to issue of an order, instruction or direction by the Board under section 37B, and such amount of duty payable is voluntarily paid in full, without, reserving any right to appeal against such payment , at any subsequent stage, within forty-five days from the date of issue of such order, instruction or direction, as the 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. At this juncture, it is relevant to refer to paragraphs (9) to (11) of the decision of the Supreme Court in SKF India Ltd. case, referred supra, wherein it is held as under: 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 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; that is to say, it is intentional, deliberate and/or by deceitful means. Naturally, the cases falling in the two groups lead to different consequences and are dealt with differently. Section 11A, however allow the assessees in default in both kinds of cases to make amends, subject of course to certain terms and conditions. The cases where the non-payment or short payment etc. of duty is by reason of fraud collusion etc. are dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise v. International Auto Ltd., 2010 (250) ELT 3 (SC) and held as follows: 8. Section 11A of the 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 11st 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, 2009 (239) ELT 385, 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-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned with the imposition of interest which, as stated above, is charged to compensate the Department for loss of revenue. Be that as it 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. (emphasis supplied) 10.6. The decision of the Karnataka High Court in Bharat Heavy Electricals Ltd. case, referred supra, holding that interest is not payable on supplementary invoices on the ground that there was no demand, is not justified in view of the emphatic finding rendered by the Supreme Court in SKF India Ltd. case, referred supra, in paragraph (11), which, with the risk of repetition, is reproduced hereunder for better clarity: 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 prices clearly falls under the provision of sub-section (2B) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of duty is clearly envisaged in Section 11A(2B) read with Explanation 2 to the said provision. Such interest was leviable even during the period in question. In fact, the Supreme Court in SKF India Ltd. case, referred supra, observed that there is some ambiguity in the said provisions, which was a cause for amendment brought to Section 11AA of the Act. The relevant portion of the observation made by the Supreme Court is as under: 7. If the object of the law is to state clearly and unambiguously the obligations of the person whom the law addresses and to spell out plainly and without any confusion the consequences of failure to discharge the obligations cast by the law then the four sections of the Act fall miles short of the desired objective. Even as originally cast the provisions were far from very happily framed and worded. Subjected to amendments from time to time those provisions have now become so complicated that in order to discern their meaning it becomes necessary to read them back and forth several times. We see no reason why the two periods for which interest is leviable may not be put together and dealt with in one consolidated provision instead of being split ..... X X X X Extracts X X X X X X X X Extracts X X X X
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