TMI Blog2009 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2B) of section 11A and attracted levy of interest under section 11AB of the Act. - 5190-5191/ 2008 - - - Dated:- 6-7-2009 - S.H. KAPADIA and AFTAB ALAM, JJ. [Judgment per Aftab Alam, J.] - Just a few weeks ago in Union of India Vs. M/s Rajasthan Spinning Weaving Mills (Appeal arising from SLP (C) No.15927 of 2007) we had the occasion to examine the nature and scope of the penalty provision in the Central Excise Act as contained in section 11AC, one of the four sections, forming a quartet, concerning recovery of unpaid duty, interest on deferred payment/realisation of duty and penalty for non-payment of duty. In this case we are called upon to consider the conditions that would attract the levy of interest on excise duty not levied or short levied, not paid or short paid or erroneously refunded as provided under sections 11A, 11AA and 11AB of the Act. It may thus be seen as the sequel to the earlier decision in M/s. Rajasthan Spinning Weaving Mills. 2. The facts of the case are fairly simple and admitted by both sides. The respondent-assessee is engaged in the manufacture and sale of ball- bearings and textile machine parts. It sold goods manufactured by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... longer by the insertion of sub-sections by later amendments. In its present form section 11A reads as under. "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-statement or suppression of facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, where it is possible to do so, shall determine the amount of such duty, within a period of one year; and (b) in any other case, where it is possible to do so, shall determine the amount of duty of excise which has not been levied or paid or has been short-levied or short-paid or erroneously refunded, within a period of six months, from the date of service of the notice on the person under sub-section (1) (2B) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty [on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer] before service of notice on him under sub- section (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub- section (1) in respect of the duty so paid: Provided that the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment of duty after the final assessment thereof; (c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund.]" (emphasis added) 5. Of the two sections dealing with interest section 11AA relates to the period from expiry of three months from the date of determination of the differential duty under sub-section (2) of section 11A till the date of payment and section 11AB is in regard to 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. 6. In this case we are concerned with section 11AB which reads as under. 11AB. Interest on delayed payment of duty.- [(1) 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 is liable to pay duty as determined under sub-section (2), or has paid the duty under sub-section 2(B), 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 notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. 8. Be that as it may. In the case in hand we have to deal with the law as it stands now. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1A (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 interest does not arise as the duty was paid as soon as it was learnt that it was payable. Finding that provisions of section 11A (2) and 11A (2B) were not applicable as the situation occurred in the instant case was quite different, section 11AB (1) was not at all applicable, and therefore, the Assessee was not required to pay interest." 13. It further held that a case of this nature would not fall in the category where duty of excise was not paid or short-paid. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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