TMI Blog2015 (7) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... onal in nature in absence of any application preferred by the respondent under Rule 7 (1) of Rule, 2002. In view of the aforesaid it has been held by the Hon'ble Supreme Court in the case of Commissioner of Central Excise Vs. International Auto Limited reported in (2010 (1) TMI 151 - SUPREME COURT OF INDIA ) that whenever there is a delayed payment of duty and there is no order for provisional assessment the assessee manufacturer is liable to make payment of the interest upon delayed payment of the duty. In view of aforesaid observations substantial questions of law have been answered accordingly that earlier assessment was never provisional in nature and it cannot be deemed to be provisional in nature as decided by the CESTAT, Kolkata, especially, in absence of any provision in the Central Excise Act 1944. In the Rule 2002 there is bound to be an application for provisional assessment by the manufacturer under Rule 7 (3) and there is bound to be an order passed by the Central Excise for provisional assessment which is not present in the facts of the present case. Respondent is bound to make payment of interest under Rule 7 (4) even if the earlier assessment is provisiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be read with Rule 7 of Central Excise Rules, 2002. One more show cause notice dated 26/27.7.2004 was given to the effect that interest of ₹ 40,545/has been demanded. Both the show cause notices were adjudicated upon and the order in original was passed by Assistant Commissioner, Central Excise, Division IV Jamshedpur on 7.4.2002. The demand was confirmed as mentioned in both show cause notices against which an Appeal was preferred bearing Appeal No. 193/JSR/CEX/Appeal/2005 which was decided by the Commissioner (Appeal) Customs and Central Excise, Patna vide order dated 06.09.2005 whereby, the Appeal preferred by the respondent was dismissed mainly on the ground that duty paid at a later date from the date of removal of goods and whenever there is a price escalation claimed by the assessee, he ought to have apply for provisional assessment under Rule 7 of the Rule 2002, otherwise, as per Rule 7 (4) also there is provision for taking interest upon late payment of Central Excise Duty. Against the said order an Appeal was preferred by the respondent being Appeal no. ESM391/ 2005 before the Custom Excise and Service Tax Appellate Tribunal, Eastern Region Bench, Kolkata (CESTAT). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent paid differential duty much later from the date of removal of goods and, therefore, demand was made about payment of interest as per Section 11 AB of the Central Excise Act, 1944 to be read with Rule 7 (4) of the Central Excise Rules, 2002, but, the same was not paid as such, two show cause notices were issued. On receipt of payment of escalated price the respondent paid the duty at later stage, but, has not paid the interest for which a show cause notice no.1 dated 23.4.2004 has been given, which is as under: Sl. No. Period Differential Amount Duty due on Duty paid on No. of days Amount of interest 1 Sep.03 to Dec,03 126797.76 6th September, 2003 5th January,2004 122 3316.91 2 Jan,01 to June,02 51593.12 21st January, 2001 21st June, 2002 477 6504.6 The second show cause notice dated 26/27th July, 2004 and late payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal assessment, but, the respondent has failed to point out such price escalation nor he had ever applied for provisional assessment. These facts are admitted facts. It is also admitted fact that differential duty was paid at later stage after recovery of the goods. 4. As a cumulative effects of these two facts the respondent is bound to make payment of interest upon delayed payment of differential duty under Section 11 AB of the Central Excise Act. This aspect of the matter has also not been properly appreciated by the CESTAT, Kolkata. Even otherwise also as per Rule 7 (4) even in the case of provisional assessment there is a provision for payment of interest upon delayed payment of the duty and therefore, even if the respondent would have applied for provisional assessment and such application would have been allowed under Rule 7 (1) of the Rules, 2002, the respondent was liable to make payment of the interest upon Rule 7 (1) and 7 (4) of the Rules, 2002. Thus, in any case i.e. even in the case of provisional assessment and even in the case of normal 6assessment whenever there is a delayed payment of duty, after removal of the goods, the assessee is bound to make payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Samrat International (Supra). A perusal of this judgment shows that the said judgment was delivered on the peculiar facts of that case and it does lay down a principle in law which enables the Revenue to treat every classification made by it or the goods removed by virtue of said classification to be treated as the provisional merely because some appeal or other proceeding is pending questioning the classification involved therein. As a matter of fact, this Court in the case of Coastal Gases Chemicals Pvt. Ltd. V. Asstt. C.C.E., Visakhapatnam (Supra) while considering the judgment in Samrat International Case (Supra) held thus: On the facts of that case, however, this Court had held that the payment of duty which was made by the appellants in that case was provisional and the procedure under Rule 9B had been followed. We have not been shown any material on record to indicate whether the appellants in the present case had cleared carbon dioxide manufactured by them by following the procedure laid down in Rule 9B or that the payment of excise duty which the appellants had made during the relevant period was provisional. 12. From the above, it is clear that to establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans. Naturally, the cases falling in the two groups lead to different consequences and are dealt with differently. 12. Section 11-A, 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 (1-A) of Section 11-A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2-B). 13. Sub-section (2-B) of Section 11-A provides that the assessee-in-default may, before the notice issued under sub-section (1) is served on him, make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and inform the Central Excise Officer in writing about the payment made by him and in that event he would not be given the demand notice under subsection (1). But Explanation 2 to the sub-section makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11-AB, that is, for the period from the first date of the month succeeding the month in which the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th no order as to costs. (Emphasis supplied) It has further been held by the Hon'ble Supreme Court in the case of Indian Refrigeration Industries Vs. Commissioner of Central Excise, Delhi reported in (2009) 16 SCC 405 at Paras 11 to 16 which reads as under: 11. As regards the contention that the demand raised was barred by time, it has been held that the classification list filed by the appellant w.e.f. 1-4-1978 was approved by the Assistant Collector on 17-12-1979 in which the benefit of exemption under Notification No. 71/78 claimed by the assessee was denied, against which the appellant filed an appeal which was allowed and the matter was remanded back to the Assistant Collector by the Collector (Appeals) for de novo consideration. At this stage notice was issued on 4-3-1980 which was within six months of the approval of the classification list i.e. on 17-12-1979. Relying upon a decision of the larger Bench in Rajeev Mardia v. CCE it was held that the assessments from 1-4-1978 till 17-12-1979 the date on which the classification list was approved remained provisional. The larger Bench, in the aforesaid case, held as under: (ELT p. 337, para 6) 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classification. In the absence of the same, we cannot accept the argument of the Revenue that in fact the order of the Assistant Collector dated 22- 1-1976 is a provisional order based on which clearance was made by the appellants or that they paid duty on that basis. On the contrary, as held by the judicial member the said order of classification was a final order, therefore, the Revenue cannot contend that the limitation prescribed under Section 11-A does not apply. This decision in Metal Forgings case 3 was approved by a three-Judge Bench of this Court in CCE v. Hindustan National Glass Industries Ltd. 4 (refer to the observations made in para 18 of the judgment). 14. In view of the subsequent judgments of this Court in Metal Forgings case and Hindustan National Glass Industries Ltd. case the impugned order based on the decision of Samrat International cannot be sustained. The assessment framed till the approval of the classification list on 17-12-1979 cannot be treated to be provisional. 15. Admittedly, in the present case, show-cause notice was issued on 4-3-1980 i.e. much beyond the period of six months as provided under sub-rule (1) of Rule 10 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (1) is served on him, make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and inform the Central Excise Officer in writing about the payment made by him and in that event he would not be given the demand notice under sub-section (1). But Explanation 2 to the subsection makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11-AB, 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. 14. What is stated in Explanation 2 to subsection (2-B) is reiterated in Section 11-AB 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 (2-B) of Section 11-A, shall, in addition to the duty, be liable to pay interest . It is thus to be seen that unlike penalty that is attracted to the category of cases in which the nonpayment or short-payment, etc. of duty is 'by reason of fraud, collusion or any wilful misstatement or suppression of facts, or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary 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-section (2-B) of Section 11-A and attracted levy of interest under Section 11-AB of the Act. 7. In SKF India Ltd., it has been, inter alia, held, as can be seen from the abovequoted paragraphs, that sub-section (2-B) of Section 11-A provides that the assessee in default may make payment of the unpaid duty on the basis of his own ascertainment 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 11-A(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 11-AB of the Act. What is stated in Explanation 2 to sub-section (2-B) is reiterated in Section 11-AB of the Act, which deals with interest on delayed payment of duty. 8. From the scheme of Section 11-A(2-B) and Section 11-AB of the Act, it becomes clear that interest is levied fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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