TMI Blog2015 (1) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be available only in the returns filed in July, 2002 and January, 2003. The show cause notice having been issued in October, 2003, the demand in respect of payment made in December, 2002, is clearly within the normal period of limitation of one year and hence, the demand of interest in respect of this payment is clearly sustainable. Though a contention has been raised that since the issue pertained to interpretation of the statute, imposition of penalty is not warranted is not agreed for the simple reason that it is not the case of the appellant that he was not liable to pay interest. The only contention is that the notice was not issued in time. It should be remembered that the appellant is operating in a “self-assessment of tax” regime and therefore, a greater responsibility is cast on him to comply with the requirements of law. Rule 27 imposing general penalty does not require any mens rea on the part of the assessee and mere default will suffice to attract its provisions Thus the interest on the duty paid in December 2002 is upheld. Penalty imposed under Rule 27 for default in payment of interest is also upheld. As far as the interest on the duty paid in May is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of demand notice or its confirmation, recovery of interest is bad in law (c) Due to revenue neutral situation, the ratio of the decision of the Tribunal in appellant s own case squarely applies to this case 4.1 He further submitted that the recovery of interest has to be effected within the period of limitation as applicable to the duty on which interest is sought to be levied. To support this contention he relied on the decision of this Tribunal in the case of Emco Ltd. v. CCE - 2011 (272 E.L.T. 136 (Tri.-Mumbai) which has been affirmed by the Hon ble Bombay High Court in Central Excise Appeal (L) No. 116 of 2011, dated 11-4-2012. 4.2 He further submitted that as there is no allegation of any suppression of facts or misstatement therefore, extended period of limitation cannot be invoked as held by the Hon ble Supreme Court in the case of Kaur and Singh v. CCE - 1997 (94) E.L.T. 289 (S.C.). 4.3 He also submitted that as it is a revenue neutral situation therefore, as held by this Tribunal in their own case vide order No. M/1291/WZB/AHD/2012, dated 5-7-2012 = 2013 (292) E.L.T. 389 (Tri.-Ahmd.), demand of interest is not sustainable. 4.4 He further submitted that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of one year referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation 1. - Nothing contained in this sub-section shall apply in a case where the duty was not levied or was not paid or was short-levied or was short-paid or was erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. Explanation 2. - For the removal of doubts, it is hereby declared that the interest under section 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short-payment of duty, if any, as may be determined by the Central Excise Officer, but for this sub-section. 7.1 A similar issue came before this Tribunal in the case of Emco Ltd. (supra) wherein the assessee recovered the differential prices on goods which have already been cleare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n will depend upon the facts of each case. 11. The Central Excise Act provides a time limit of one year from the relevant date for demand of duty in normal circumstances and a time limit of five years for demand of duty in cases where fraud, suppression of facts, collusion, etc. are involved. In the instant case, there is no allegation that the assessee delayed payment of duty on account of any of these elements. On the other hand, it is very clear that the assessee had discharged the differential duty liability on their own. The differential duty payments were made during the period from May, 2004 to March, 2009 and were also reflected in the corresponding monthly returns filed by the assessee. Thus, the department was fully aware that the assessee was raising supplementary invoices for recovery of differential prices subsequent to the clearance of the goods and they were also discharging differential duty liability on issue of supplementary invoices. Therefore, it was incumbent on the department to recover interest which the assessee had failed to pay within a reasonable period. In a similar case, the Hon ble Apex Court in the case of Commissioner v. TVS Whirlpool Ltd. [2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e kept in mind. These would be mentioned in subsequent paras. In fact, this case was heard on 9-10-2014 wherein the appellant relied upon the decision of this tribunal in the case of Emco Ltd. (supra) which was later on confirmed by the Hon ble Bombay High Court. After hearing the case for some time it was observed that the facts in the said case as recorded in para 11 were as under :- The differential duty payments were made during the period from May, 2004 to March, 2009 and were also reflected in the corresponding monthly returns filed by the assessee. Thus, the department was fully aware that the assessee was raising supplementary invoices for recovery of differential prices subsequent to the clearance of the goods and they were also discharging differential duty liability on issue of supplementary invoices. As there was no indication in the present case that the differential amount paid on 30-6-2002 and 6-12-2002 were reflected in the corresponding monthly returns filed by the appellant and whether it was indicated in the monthly returns that the said payments were relating to the differential duty that has arisen due to re-determination of the value, the learned Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hyderabad. For clearance of the goods, the appellant was adopting Cost Construction Method under Rule 8 of the Central Excise Valuation Rules, 2000. In the said Cost Construction Method, the correct value can be determined on quarterly or yearly basis after the said quarter/year is over and cannot be determined in advance. In such cases the assessees normally pay the duty on provisional basis based upon their estimates and later on submits the cost construction details received from the Cost Accountant in CAS-4 format and on the basis of such certificate the value is finally determined and differential duty is paid. Thus at the time of clearance of goods appellants were not in a position to determine the assessable value, what should be done in such situation? In fact Rule 7 of the Central Excise Rules, 2001 precisely covers such situation. Rule 7 reads as under :- 7. Provisional assessment. - (1) Where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving reasons for paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence of such duty to any other person, or (b) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person. 12. Thus the correct procedure for the appellant was to apply to the Asst. Commissioner for permitting him to pay duty on provisional basis and thereafter finalise the assessment on availability of the data/certificate relating to final cost. However, for reasons best known to the appellant, this procedure was not followed. Appellant paid duty based upon his estimation and the duty was paid as if it is final assessment. In June 2002 and December 2002 the appellant however, computed the final duty liability and paid the differential duty. However, the interest as stipulated under Rule 7 or as stipulated under Section 11A(2B) was not paid. There is no evidence to indicate that the facts of differential duty were indicated in the monthly returns. It is to be noted that when the appellant paid duty in June 2002 and December 2002 for the period April, 2001 to March, 2002 a part of the duty paid in the normal period of limitation had already become time-barred. However, keeping in view of the fact that the appellant did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Appeals), the Appellate Tribunal or as the case may be, the Court, the interest shall be payable on such reduced amount of duty. Explanation 2. - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, the interest shall be payable on such increased or further increased amount of duty. It would be seen from the said Section that the Section does not provide for issuance of show cause notice or any time limit for issuance of show cause notice. In fact this Tribunal in the past has been taking a stand that no show cause notice is required to be issued for recovery of interest. For example in the case of Commissioner of Service Tax, Ahmedabad v. Pepsi Cola India Marketing Co. - 2007 (8) S.T.R. 246 (Tri.-Ahmd.) wherein this Tribunal has observed as under :- 2. The revenue s grievances that no demand notice or written notice is required to be issued for confirmation of interest which is a liability accruing as a consequence of payment. Reliance has been placed upon the Tribunal s decision in the case of TCP Ltd. v. CCE Madurai - 2006 (1) S.T.R. 134 (Tri.-Chenna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inment 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-section (2B) is reiterated in Section 11AB of the Act, which deals with interest on delayed payment of duty. From the Scheme of Section 11A(2B) and Section 11AB of the Act, it becomes clear that interest is levied for loss of revenue on any count. In the present case, one fact remains undisputed, namely, accrual of price differential. What does differential price signify? It signifies that value, which is the function of the price, on the date of removal/clearance of the goods was not correct. That, it was understated. Therefore, the price indicated by the supplementary invoice is directly relatable to the value of the goods on the date of clearance, hence, enhanced duty. This enhanced duty is on the corrected value of the goods on the date of removal. When the differential duty is paid after the date of clearance, it in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power within a reasonable period. In that case, the Hon ble Apex Court in para 6 of the judgement, inter alia, held as follows :- In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it would be for the relevant officer to consider the question whether in the facts and circumstances of the case, notice or demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case. In the case of Collector of Customs v. T.V.S. Whirpool Ltd. - 1996 (86) E.L.T. 144 (Tri.), certain goods were imported and after the assessment of Bills of Entry goods were shifted to warehouse. However, these were not shifted to warehouse within a period of 7 days and interest of liability beyond the period of 7 days accrued in terms of Section 47 after the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is to be mentioned that Section 11A provides normal period of limitation and also provides under what circumstances extended period of limitation would be applicable and in view of the wordings of the said Section it is mandatory for the authorities to indicate the reason for invoking the extended period of time. Section 11AB on the other hand does not provide for any limitation of time nor any conditions for invoking extended period of time. As held by the Hon ble Supreme Court in the case of Citedal Fine Pharmaceuticals (supra) where a notice has been issued within the reasonable period or not would have to be determined only keeping the view of the facts of each case. Then there is no requirement of making such an allegation in the show cause notice and it is for the adjudicating authority to take a view. In the present case undoubtedly the appellant has not followed the procedure of provisional assessment at the time of initial assessment and had paid duty as if it is final value. Later on, appellant paid duty even for the extended period of imitation but again kept hidden fact of differential duty payment in the monthly returns. In view of this particular situation, my con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the above positions, the appeal filed by the appellant is dismissed. Sd/- (P.K. Jain) Member (Technical) 23. In view of the difference of opinion between Member (Judicial) and Member (Technical), the matter may be placed before the President to nominate 3rd Member to resolve the difference of opinion on the following points. 1. In the present case duty short paid is pertaining to the period 1-4-2001 to 31-3-2002. The duty short paid was deposited in the bank by the appellant partly on 30-6-2002 and partly on 6-12-2002. Demand for interest has been issued on 21-10-2003. Thus part of demand of interest was within one year from the date of 2nd payment on 6-12-2002. Under the circumstances part of the demand of interest is within the normal period of limitation of one year and hence that part of the demand in any case is sustainable as held by Member (Technical). Or Since there is no allegation of suppression of facts, the demand of interest is not sustainable as held by Member (Judicial). 2. In Section 11A of the Central Excise Act, extended period of limitation of five years can be invoked under the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been given on this issue by Member (Judicial). (Order pronounced on 8-12-2014) Sd/- (P.K. Jain) Member (Technical) Sd/- (Ashok Jindal) Member (Judicial) 24 . [Order per : P.R. Chandrasekharan, Member (T)]. - The first Point of difference referred to me for consideration reads as follows :- 1. In the present case duty short paid is pertaining to the period 1-4-2001 to 31-3-2002. The duty short paid was deposited in the bank by the appellant partly on 30-6-2002 and partly on 6-12-2002. Demand for interest has been issued on 21-10-2003. Thus part of demand for interest was within one year from the date of 2nd payment on 6-12-2002. Under the circumstances part of the demand of interest is within the normal period of limitation of one year and hence that part of the demand is in any case sustainable as held by Member (Technical). Or Since there is no allegation of suppression of facts, the demand of interest is not sustainable as held by Member (Judicial). 25. Section 11AB of the Central Excise Act, 1944, which governs the levy of interest, read as follows at the material time. Section 11AB. Interest on delayed pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e monthly return showing particulars of the duty paid on the excisable goods removed during the period to which the said return relates, and in a case where no periodical return is filed, the last date on which such return is to be filed, as provided under Section 11A(3)(ii)(a)(A)/(B). In as much as no allegation of suppression, willful mis-statement, etc. is alleged, the normal period of limitation of one year would apply and therefore, the last date for issue of show cause notice for recovery of interest would have expired on 10-4-2003 (one year from the date of filing of return for March, 2002, which is 10-4- 2002). In the present case show cause notice having been issued on 21-10-2003, the demand for recovery of interest is time-barred. Reliance is placed on the decisions of the Tribunal in the case of, - (i) TVS Whirlpool Ltd. [1996 (86) E.L.T. 144] affirmed by the Hon ble Apex Court [2000 (119) E.L.T. A177 (SC)]; (ii) Emco Ltd. [2011 (272) E.L.T. 136 affirmed by the Hon ble Bombay High Court in Central Excise Appeal (L) No. 116 of 2011; (iii) Hindustan Insecticides Ltd. [2013 (297) E.L.T. 332]; (iv) Kwality Ice Cream Co. [2012 (281) E.L.T. 507 (Del.) = ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its they would have done so. However, the hon ble Apex Court in several decisions such as TVS Whirlpool (supra), Citadel Fine Pharmaceuticals (supra) and Kanhai Ram Thekedar [2005 (185) E.L.T. 3 (SC)] have held that in the absence of a specific time limit for demand of interest specified in the statute, the demand for interest has to be made within a reasonable time limit. Under the Central Excise Act, the normal period of limitation for demand of duty short levied or not levied, etc. is one year. Now the question is how does or from what date the said period of one year should be computed. The appellant herein was asked by the Regular Bench to file copies of the monthly excise returns so that it can be ascertained when and whether they had intimated the fact of short payment of duty; however, the appellant was unable to produce copies of the said returns. In the absence of any such evidence led by the appellant, it can be safely presumed that the fact of short payment of duty was brought to the notice of the department only in the monthly returns filed after payment of differential duty. In the present case, it is a fact on record that the short payments were made good only on 30- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to specifically state the situations enumerated in proviso to Section 11A. It is for the adjudicating authority to decide whether extended period of limitation would be applicable as held by the Hon ble Supreme Court in the case of Citadel Fine Pharmaceuticals (supra) and detailed in para 8 of the order of Member (Technical). Or It is necessary even for the demand of interest, the Revenue is required to make specific allegations relating to suppression, fraud, willful mis-statement etc. as enumerated in proviso to Section 11A as held by Member (Judicial). 26.1 I have perused carefully the decision of the Hon ble Apex Court in Citedal Fine Pharmaceuticals case (supra). The only ratio as far as I can see, which has been laid down in the said decision is that merely because the provision of a statute does not lay down any time limit, the exercise of power under the said provision cannot be invalidated so long as the power is exercised within a reasonable period. The question whether a party should be put to notice or not before initiating any action was not a question before the Hon ble Apex Court in the said case. Nowhere in the said decision, the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order should have right of being heard and making representations against the order. The same position was reiterated by the Hon ble Apex Court in Charanlal Sahu v. Union of India [AIR 1990 SC 1480] as under : - 9.1 The fact that the provisions of the principles of natural justice have to be complied with, is undisputed. This is well-settled by the various decisions of the Court. The Indian Constitution mandates that clearly, otherwise the Act and the actions would be violative of Article 14 of the Constitution and would also be destructive of Article 19(1)(g) and negate Article 21 of the Constitution by denying a procedure which is just, fair and reasonable. 9.2 Rules of natural justice are not embodied rules. Hence, it was not possible to make an exhaustive catalogue of such rules. Audi alteram partem is a highly effective rule devised by the Courts to ensure that a statutory authority arrives at a just decision and it is calculated to act as a healthy check on the abuse or misuse of power. Therefore, I am in agreement with the view taken by the Hon ble Member (Judicial) as far this point is concerned. 27. The next point of reference reads as follows:- 3. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral penalty does not require any mens rea on the part of the assessee and mere default will suffice to attract its provisions. In Gujarat Travancore Agency v. CIT, Kerala [1989 AIR SC 1671], the Hon ble Apex Court held that, - The creation of an offence by Statute proceeds on the assumption that society suffers injury by the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. ................... Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. 28. There are two more points mentioned in the reference, wherein only one of the Members, namely, Member (Technical) has given a finding and these are reproduced below : - 5. Appellant has argued that in the absence of valid demand notice or its confirmation for recovery of interest is bad in law. As observed by Member (Technical) that the show cause notice was issued for demanding the amount as also demanding interest and imposition of penalty and under the circumstances, it cannot be said that recovery of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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