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TMI Blog2010 (8) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty and the sister unit after dyeing sent it back again after payment of duty. While paying duty, the appellant failed to calculate the cost of production in accordance with Rule 8 of Central Excise Valuation Rules, 2000. This was detected during the audit of the appellant's factory and on the basis of a letter or on the basis of audit objection, the appellants paid the differential duty of ₹ 8,16,219/-. The differential duty related to the years 2002-2003 and 2003-2004 and the amount was paid by the appellants between July to September 2006. Subsequently a show cause notice was issued on 19-9-06 demanding interest of ₹ 3,57,961/- under Section 11AB of Central Excise Act, 1944 which has been confirmed by the lower authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department and interest is also collected. This is the reason why the proviso has been incorporated providing for a period of one year from the date of receipt of intimation of payment. Therefore he submitted that when payment is made which is the differential duty beyond the normal period of limitation and no suppression or misdeclaration etc. is involved, such a payment becomes a voluntary payment of duty and statute has no provision to recover interest on such amounts. This is because normally when interest is demanded, it is always on duty. When the duty itself was not liable to be recovered but voluntarily paid, there is no principal which is equal to duty in this case. When there is no principal which is liable to be recovered, questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in 2010 (250) E.L.T. 3 (S.C.) to support his contention that interest is leviable for loss of revenue on any count. Therefore he submits that irrespective of the fact whether duty was payable or not, once it is paid, the interest liability cannot be avoided. 5. I have considered the submissions made by both the sides. Before I proceed further it would be appropriate to reproduce the provisions of Section 11A(2B) which reads as under : "(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 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere could be situations that there may be mistakes. Therefore Section 11A(2B) takes care of such situations where there is no suppression but the duty demand can be raised even after one year. It has to be noted that if the amount paid is correct and interest is also paid, the central excise officer can not issue any notice. Further even the proviso also provides that after determining the amount, he has got one year to issue notice or alternatively to recover the money without issue of notice. Therefore Section 11A(2B) seems to proceed on the basis that the duty liability under this Section is always determined and paid within the period of limitation prescribed under Section 11A(1) and is not applicable where an assessee voluntarily pays ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is that the payment was not made under Section 11A(2B) but was made in view of the revenue neutral situation and they never anticipated the demand for interest after making the payment of duty. There is no indication in the records to show that the assessee had made payment consciously "taking note of the provisions of Section 11A(2B) of the Act or Section 11A(2B) was under consideration at the time when duty was being paid. Under these circumstances the decisions rendered considering the provisions of Section 11A(2B) cannot be applied to the facts of this case. In view of the above circumstances the impugned order is set aside and appeal is allowed with consequential relief to the appellants. (Dictated & Pronounced in Court) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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