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2015 (11) TMI 600 - MADRAS HIGH COURT

2015 (11) TMI 600 - MADRAS HIGH COURT - 2016 (332) E.L.T. 583 (Mad.) - Demand of interest - Delayed payment of differential duty - whether on the delayed payment of differential duty, the respondent/assessee is liable to pay interest as provided under sub-rule (3) of Rule 8 at the rate as provided in the Notification issued under Section 11AB of the Act - Held that:- where the duty component involved is less than ₹ 2 lakhs, excluding mandatory penalty and any other penalty imposed under th .....

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ounsel for the respondent/assessee could be accepted, as there is no duty involved in this case and it pertains only to interest on delayed payment of differential duty. Therefore, even at the threshold, the said objection is negatived.

Show cause notice is issued in terms of Section 8 (1) of the Central Excise Rules and sub-rule (3) of Rule 8 makes it an obligation on the assessee to pay interest on account of delayed payment of duty in terms of the notification issued under Section .....

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Section 11AB of the Act was mulcted on the assessee in terms of sub-rule (3) of Rule 8. Sub-Rule (3) of Rule 8 provides for quantum of interest, viz., interest as notified in terms of Section 11AB of the Act. However, the Tribunal, without going into the factual aspect of the show cause notice, laid emphasis on Chloritech Industries case (2008 (7) TMI 278 - GUJARAT HIGH COURT ) to allow the appeal in favour of the assessee. The Tribunal has not adverted to the merits of the matter and also the r .....

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Respondent : Mr. N.Viswanathan for R-1 JUDGMENT (DELIVERED BY R.SUDHAKAR, J.) Aggrieved by the order passed by the Tribunal in allowing the appeal filed by the assessee, the Revenue/appellant is before this Court by filing the present appeal. This Court, vide order dated 8.2.2010, while admitting the appeal, framed the following substantial question of law for consideration :- Whether the Tribunal is correct in disregarding the rulings of the Supreme Court delivered in a similar case in the case .....

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ders placed by TNEB under the said contract. However, supplementary invoices were raised by the first respondent and differential duty for a sum of ₹ 26,63,848/= was paid. However, appropriate interest was not paid by the assessee, though it is liable to pay the same as per Section 11AB of the Central Excise Act. Therefore, a show cause notice was issued on the first respondent by the appellant demanding interest for belated payment of differential duty and also invoking the penalty clause .....

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t. The relevant portion of the order is extracted hereinbelow for better clarity :- "13. In the case of Spicer India Ltd. reported in 2007 (210) ELT 312 (Commr. Appl.), the Appellate Commissioner has held that "Interest - Delay in payment of duty - Valuation arrived at on CAS 4 prepared on basis of previous years financial accounts - Valuation found on higher side when balance sheet for current year finalized, hence, duty paid thereon - Enhanced price becomes correct assessable value a .....

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he case of Inducto Casts - Vs - Commissioner of Central Excise & Customs, Vadodara-I, reported in 2007 (217) ELT 455 (Tri. - Ahmd.), the Hon'ble CESTAT held that "Interest - Valuation (Central Excise) - Price escalation clause - Rate revised subsequent to removal of goods - Differential duty paid but interest not paid - Value at time of clearance provisional - amount received consequent to price escalation includible in transaction value - Even if provisional assessment is not sough .....

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; 15. Applying the ratio of the above decisions that interest is payable on the amount received consequent to price escalation/variation, I am inclined to hold that the allegation made in the show cause notice that the demand of interest on the differential duty paid consequent on the upward revision of price due price variation clause, is maintainable in law and the same is liable to be recovered from the assessee under Section 11AB of the Central Excise Act, 1944." 3. In respect of the pl .....

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or demand of interest. Therefore, the assessee's contention fails before law since the demand of interest beyond the period of one year is sustainable." 4. Aggrieved against the said adjudication order, the respondent filed appeal before the Commissioner (Appeals). The Commissioner (Appeals), vide order dated 15.01.2009, confirmed the order of the adjudicating authority. 5. Against the said order, the first respondent/assessee preferred appeal to the Tribunal. The Tribunal, on consideri .....

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emand, the Gujarat High Court, in CCE, Vadodara - Vs - Chloritech Industries (2014 (306) ELT 447 (Guj.)), following the decision of the Supreme Court in Commissioner of Central Excise, Pune - Vs - SKF India Ltd. (2009 (239) ELT 385), allowed the appeal filed by the Revenue. In the light of the above position of law, it is submitted by the learned standing counsel for the Department that the issue in relation to interest having been settled by the Supreme Court in SKF India case (supra), the orde .....

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/assessee raised a preliminary objection as to the maintainability of the case of the appellant contending that the appellant ought not to have filed the appeal in view of the National litigation policy of the Government issued by the Ministry of Finance, Department of Revenue, Central Board of Excise & Customs. vide Instructions dated 20.10.2010 in F.No.390/Misc./163/2010-JC, wherein the following instruction has been issued :- "5. The Board has decided that appeals in the Tribunal sha .....

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penalty imposed under the relevant provisions of Law, no appeal shall henceforth be filed in the Tribunal as the duty involved is within the monetary limit of ₹ 1 Lakh. Similarly, if the duty involved in a case is ₹ 2 Lakhs with equal mandatory penalty and any other penalty imposed under the Law in force at the relevant time, no appeal shall be filed before the High Court." 8. It is further contended by the learned counsel for the respondent that in view of the above instruction .....

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earing for the appellant/Revenue and the learned counsel appearing for the respondent/assessee and perused the materials available on record and also the judgments relied on by the learned counsel appearing for the parties. 10. Even before embarking upon deciding the contentions raised by the learned counsel on either side, on merits, it is to be observed that the question of law has been wrongly framed, as rightly pointed out by the learned counsel appearing for the assessee. The decision of th .....

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is that the monetary limit is well below ₹ 2 Lakhs and, therefore, the department ought not to have filed the appeal in view of the National Litigation Policy. To consider the above submission raised by the learned counsel for the respondent, it is necessary to advert to the National Litigation Policy of the Government, wherein monetary limit for filing appeal before the various forums has been fixed. For better appreciation, at the risk of repetition, the relevant portion of the National .....

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ple, in a case involving duty of ₹ 1 Lakh with mandatory penalty of ₹ 1 Lakh besides any other penalty imposed under the relevant provisions of Law, no appeal shall henceforth be filed in the Tribunal as the duty involved is within the monetary limit of ₹ 1 Lakh. Similarly, if the duty involved in a case is ₹ 2 Lakhs with equal mandatory penalty and any other penalty imposed under the Law in force at the relevant time, no appeal shall be filed before the High Court." .....

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ought to be levied by the appellant/Revenue. In the present appeal, the imposition is only interest on delayed payment of duty component. Therefore, by no stretch of imagination, the argument of the learned counsel for the respondent/assessee could be accepted, as there is no duty involved in this case and it pertains only to interest on delayed payment of differential duty. Therefore, even at the threshold, the said objection is negatived. 13. Insofar as the other contentions are concerned, it .....

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, the respondent/assessee is liable to pay interest as provided under sub-rule (3) of Rule 8 at the rate as provided in the Notification issued under Section 11AB of the Act." 14. The Tribunal has held in favour of the assessee relying upon the decision in Chloritech Industries case (supra - 2009 (235) ELT 17), wherein the core issue is as under :- "Whether in the facts and circumstances of the case, the Tribunal erred in holding that no interest as prescribed under the provisions of S .....

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the decision in the case of SKF India Limited (supra) was followed in subsequent decision in the case of CCE v. International Auto Limited (supra). The Apex Court observing that the differential price signified that value, which is the function of the price, on the date of removal/clearance of the goods was not correct. It was further observed that when the differential duty is paid after the date of clearance, it indicates short payment/short levy on the date of removal, hence interest which i .....

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r 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, from the date of such erroneous refund, as the case may be, but for the provisions c .....

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e, 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) The provision of sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President. Explanation 1. - Where the duty determined to be payable is reduced by the Commissioner (Appeals), the Appellate Tribunal National Tax Tribunal or, .....

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ce received by the assessee for the goods sold was based on fluctuating price regime and fluctuated on the basis of factors over which the assessee had no control. Whereas, in SKF case, assessee received higher price for goods already cleared and sold on account of retrospective price increase. However, to our mind, this distinction is not material. What is important is that the assessee received differential price of the goods after its clearance. At the time of clearance, assessee had paid exc .....

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ot; 16. In the present case, the show cause notice is issued in terms of Section 8 (1) of the Central Excise Rules and sub-rule (3) of Rule 8 makes it an obligation on the assessee to pay interest on account of delayed payment of duty in terms of the notification issued under Section 11AB of the Central Excise Act. For better clarity, Rule 8 (3) of the Central Excise Rules is quoted hereinbelow :- "If the assessee fails to pay the amount of duty by due date, he shall be liable to pay the ou .....

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