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2015 (12) TMI 1049 - CESTAT CHENNAI

2015 (12) TMI 1049 - CESTAT CHENNAI - TMI - Levy of interest u/s 11AA - Demand of differential duty - value addition of charity amount in the assessable value - Held that:- Supreme Court decision is squarely applicable to the present case as the differential duty was determined under section 11A(2) of Central Excise Act and the notice was issued by the proper officer for demanding differential duty and subsequently confirmed and the same was ultimately paid by the appellant. Therefore, by virtue .....

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llants are liable to pay interest from the first day of the month following the month where the duty has become due. Therefore, we do not find any infirmity in the orders passed by both the authorities below confirming the interest under the provisions of amended section 11AA. - Decided against Assessee. - E/40135 to 40138/2013, E/40212 & 40214 to 40226/2013, E/40213, 40243 to 40247/2013 And E/40894 to 40911/2013 - Final Order Nos. 41546-41587 / 2015 - Dated:- 24-11-2015 - Shri R. Periasami, Tec .....

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the amount at the rate of 3% and 2% on the value of goods cleared towards charity and transit insurance and same were not included in the assessable value. The department initiated proceedings for demanding differential duty on the charity amount. The Tribunal vide Final Order dated 10.5.2011 allowed the appeals of the Department and held that mahamai (charity) charges to be included in the assessable value and dismissed the assessee s appeals except allowing cum-duty benefit. 3. Consequent upo .....

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his Tribunal only against levy of interest under section 11AA as amended. 4. This Tribunal by exparte Final Order No. 40138 to 40149/2014 dated 24.1.2014 dismissed all the 12 appeals and upheld the impugned order. Against the Tribunal s final order, the appellants preferred appeals before the Hon ble High Court of Madras. The Hon ble High Court of Madras in its order dated 12.8.2015 in CMA Nos. 902 to 913/2014 set aside the Tribunal s final order and remanded the matter to the Tribunal for fresh .....

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ind merit in the present appeals. 10. In view of the above, the substantial question of law No. 1 is answered in favour of the assesse. Since we are inclined to set aside the impugned order on the ground of violation of principles of natural justice and remand the matter to the CESTAT, there is no necessity to consider and answer the substantial question of law No. 2. 11. Accordingly, we allow these Civil Miscellaneous Appeals and set aside the final order dated 24.1.2014, passed by the Customs, .....

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he Tribunal forthwith for the disposal of the appeals. 5. Consequent upon the order of the Hon ble High Court, all the 12 appeals were restored and are taken up for denovo disposal and the remaining 30 appeals which are identical in nature pertaining to subsequent periods are also taken up for hearing and disposal. 6. Heard both sides and perused the record. 7. Learned counsel appearing for the appellants submitted a written submission dated 27.10.2015 and a paper book containing case laws and r .....

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tly section 11AB came into effect from 28.9.1996. As per section 11AA as it existed during the material period, the interest is payable only after three months of the determination of duty. He submits that they are not covered under section 11AB as there is no willful evasion, fraud or collusion. He submits that section 11AB is further amended with effect from 11.5.2001 wherein sub-section (1) of section 11AB was amended which is applicable from 11.5.2001. He further submits that since both the .....

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1AA after amendment with effect from 11.5.2001. He submits that except Sl. No. 17 all cases are covered under section 11AA. He drew attention to Excise Manual annexed at page 42 particularly para 1.2, 1.3.1. He relied on the following case laws:- (a) CCE, Chennai Vs. Lucas TVS Ltd. - 2010 (262) ELT 444 (b) CCE, Coimbatore Vs. SuthamNylocots - 2014 (306) ELT 255 (Mad.) (c) CCE, Bangalore - III Vs. Scorpio Engg. Pvt. Ltd. - 2015 (322) ELT 667 6. On the other hand, the learned AR for Revenue reiter .....

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both section 11AA and section 11AB got merged and one single section came into effect. Therefore, he submits that interest has been rightly demanded from the date when the duty was due as per section 11AA of the amended provision. He relied on the following case laws:- (a) Punjab Bearing Industries Ltd. v. Union of India - 2007 (207) E.L.T. A97 (S.C.) (b) Canara Bank - AIR 2001 SC 3095 (c) CCE, Pune Vs. SKF India Ltd. - 2009 (239) ELT 385 (SC) (d) Pratibha Processors Vs. Union of India - 1996 ( .....

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y the Honble High Court of Madras in their order dated 12.8.2015 to examine the issue of liability of interest during the relevant period, we have proceeded to dispose of the appeals. 8. On perusal of the records and the orders passed by both the authorities below, we find that the Department disputed valuation from the year 2000 onwards and show cause notices were issued for addition of charity amount received from the buyers in the transaction value under section 4 of Central Excise Act, 1944 .....

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dible in the assessable value. Consequent to the order, the adjudicating authority has re-determined the duty after allowing cum-tax benefit. 10. On perusal of the impugned order, we find that the adjudicating authority in all his orders re-determined the duty and also demanded interest under amended section 11AA which was in force during the period and also imposed penalty. On appeal, the lower appellate authority upheld the demand and interest and waived the penalty. 11. The appellant s main c .....

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ich is only applicable for case of demand relating to fraud, willful suppression, collusion etc. When section 11AB was further amended with effect from 11.5.2001, both section 11AA and 11AB contained the provisions of demanding interest. 12. On perusal of Order-in-Original No. 3/2011 dated 8.12.2011, in Appeal No. E/40135/2013, we find that the adjudicating authority has brought out his finding on the issue of demanding interest and tax issue in detail at para 19 to 27 and clearly brought out al .....

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he charity amount so the differential duty is due from the date when it was liable to be paid and the Tribunals order has attained finality, whereas the demand of differential duty was raised by the department. This is not a case of voluntary payment but there was a notice issued demanding differential duty and therefore the demand was confirmed and after the Tribunal s order the duty was re-determined and the interest payable liability arises from the date duty becomes due. In this regard, it .....

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duty has become payable or ought to have paid before 11-5-2001 when the Finance Bill, 2001 was given assent to by the President. In short it is the submission that provisions of sub-section (2) of Section 11AB has done away with the provisions of Section 11AB as it stood prior to 11-5-2001 in so far as the cases wherein the demand of the duty has been confirmed in accordance with the Proviso to Section 11A of the Central Excise Act, 1944. That is to say that when the demand of the duty is confi .....

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do not indicate the intention propounded by the ld. counsel. The provisions for charging of interest under the Central Excise Act were brought in for the first time from 28-9-1996 by introduction of Section 11AB to the Central Excise Act, 1944. The provision mandated levy of interest on duty not paid, or short paid or erroneously refunded from the first day of the succeeding month in which the duty ought to have been paid. These provisions of Section 11AB as introduced from 28-9-1996 were, howev .....

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f the Central Excise Act, 1944. Noting the lacuna which failed to enable levy of interest in cases wherein there was an element of fraud, collusion or any wilful mis-statement or suppression of facts with intent to evade payment of duty, provisions of Section 11AB was introduced w.e.f. 28-9-1996. On a holistic reading of the amendment w.e.f. 11-5-2001, we are of the view that the said amendment has enlarged the scope of the coverage of recovery of interest to all cases wherein the demand has bee .....

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he judgment of the Honble High Court of Gujarat in the case of Exotic Associates (supra). In the said tax appeal, the substantial questions of law which were formulated by the court are usefully reproduced as under : 2. Tax Appeal No. 572 of 2007 is filed by the assessee. This appeal was admitted on 4-5-2007 and following substantial questions of law were formulated by the Court at the time of admission of the appeal :- A. Whether penalty was liable to be imposed on the assessee in case where p .....

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aragraph No. 18 which we reproduce. 18. So far as the appeal filed by the revenue is concerned, the Tribunal has deleted the interest only on the ground that the demand relates to the period of 1997 to 2000 and on that count, it was held that no interest is leviable in respect of demand prior to 11-5-2001. It is, however, contended before us that while taking the said view, the Tribunal has only considered the provisions of sub-section (2) of Section 11AB brought on the Statute Book by the Act 1 .....

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m 28-9-1996 and 11-5-2001. Sub-section (2) of Section 11AB specifically states that the provision of sub-section (1) of Section 11AB shall not apply to cases where the duty had become payable on the date on which Finance Act, 2001 received the assent of the President. It was, therefore, open and permissible to levy interest under Section 11AB for the period subsequent to 28-9-1996 under the unamended provision of Section 11AB of the Act. 10. We find that the issue as referred to the Larger Bench .....

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4, and even prior to 11-5-2001. 13. The ratio of the above decision squarely applies to this case. Further, we find that the Hon ble Supreme Court in the case of CCE, Pune Vs. SKF India (supra) clearly discussed and settled the issue of the leviability of interest under section 11AA and 11AB. The relevant paragraph is reproduced below:- 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 .....

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cases failing 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 under sub-section (1A) of Section 11A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2B). 10. Su .....

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not be exempt 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, .....

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e 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 prices clearly falls under the provision of sub-section (2B) of Section 11A of the Act. 12. The Bombay High Court, Aurangabad Bench, in its decision in The Commissioner of Central Excise, Aurangabad v. M/s. Rucha Engineering Pvt. Ltd., (First Appeal No. 42 of 2007) that was relie .....

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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 a .....

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retrospective revision of the prices. It, therefore, follows that at the time of sale the goods carried a higher value and those were cleared on short payment of duty. The differential duty was paid only later when the assessee issued supplementary invoices to its customers demanding the balance amounts. Seen thus it was clearly a case of short payment of duty though indeed completely unintended and without any element of deceit etc. The payment of differential duty thus clearly came under sub-s .....

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