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2016 (4) TMI 795 - MADRAS HIGH COURT

2016 (4) TMI 795 - MADRAS HIGH COURT - 2016 (336) E.L.T. 485 (Mad.) - Interest under Section 11AA - effect of amendment - Held that:- A careful look at the tabulation would show that the distinction between the two categories of cases that was maintained upto 11.5.2001 disappeared to some extent by the amendment inserted from 11.5.2001. Though a small distinction was still retained, the liability to pay interest became common for both categories of cases and a distinction was retained only in re .....

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ndment with effect from 8.4.2011, Section 11AA itself is removed. Therefore, all types of cases where there is a determination under Section 11A(2) are treated alike irrespective of the presence or absence of fraud, collusion, etc. - Getting back to the cases on hand, it could be seen that the periods, in respect of which, the show cause notices were issued, were all from 1997 to 2000. The show cause notices covered by the Order in Original bearing Nos.18/2000 and 54/2000 were dated 2.4.1998 .....

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11.5.2001. In so far as the cases where show cause notices were issued before 11.5.2001, it is seen from all the show cause notices, the Orders in Original and the orders of the Appellate Authority that there was no allegation of fraud, collusion, misrepresentation, etc. Even the communication of the Superintendent dated 12.11.2013 does not categorise the case of the assessee as one where there was fraud, collusion, etc. But, the communication of the Superintendent dated 12.11.2013 refers to Sec .....

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in Original bearing No.54/2000 is concerned, the demand for payment of interest was made at 24% per annum under Section 11AA. This demand, without any discussion, was upheld by the Appellate Authority as well as the Tribunal. - The Appellate Authority as well as the Tribunal ought to have at least considered as to why a rate of interest at 24% was chosen between the minimum of 10% and the maximum of 30%. The case of the assessee was that there was a claim for refund, which could have been a .....

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bramanian And N. Kirubakaran, JJ. For the Appellant : Mr. B. Kumar, SC for Mr. S. M. Abdul Nazeer For the Respondents : Mr. A. P. Srinivas JUDGMENT ( Judgment was delivered by V. Ramasubramanian, J ) All these appeals are directed against the orders of the Customs, Excise and Service Tax Appellate Tribunal. 2. Heard Mr.B.Kumar, learned Senior Counsel for the appellant and Mr.A.P.Srinivas, learned Standing Counsel for the Department. 3. The appellant holds a central excise registration bearing No .....

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rious periods namely 9/97 to 12/97, 1/98 to 4/98, 5/98 to 8/98, 9/98 to 12/98, 1/99 to 4/99 and 5/99 to 8/99, the appellant/assessee was called upon to show cause as to why a demand for additional duty of excise to the total extent of ₹ 20,27,588/- should not be demanded for adopting a lower assessable value at the time of removal of the goods. 5. All these six show cause notices resulted in an Order in Original bearing No.18/2000 dated 29.2.2000, confirming the demand of duty to the tune .....

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o the tune of ₹ 3,87,446/-. This order was also confirmed by the same order in appeal No.178/2003. 7. Yet another show cause notice bearing No.481/2001 dated 11.5.2001 relating to the period 5/2000 to 6/2000 was issued and the same resulted in an Order in Original No.43/2001 dated 15.10.2001 confirming a demand of ₹ 2,34,292/-. This order was confirmed on the same appeal bearing No.178/2003 dated 28.11.2003. 8. The last show cause notice bearing No.479/2001 dated 11.5.2001 for the pe .....

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d common order passed in four appeals, the assessee has come up with C.M.A. Nos.1949 to 1952 of 2015. 10. But, before coming up with the appeals, the assessee also filed miscellaneous petitions in E/Misc/40865 to 40868/2014 seeking a clarification of the final order and also for a rectification of the mistake alleged to have crept into the final order. These miscellaneous petitions were dismissed by the Tribunal by an order dated 14.8.2014. As against the said common order dated 14.8.2014, dismi .....

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sed in the miscellaneous petitions, as follows : (i) After the disposal of substantial appeals by the Tribunal by a common order dated 9.7.2013, the Superintendent, SPIC II Range issued a communication dated 12.11.2013 to the assessee, calling upon the assessee to pay interest to the tune of ₹ 26,68,917/- on the ground that under Section 11AB of the Central Excise Act, 1944, the assessee is liable to pay interest, if any duty of excise has not been levied or paid or has been short-levied o .....

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compelled the assessee to make four petitions before the Tribunal in Misc. Petition Nos.40865 to 40868/ 2014 for clarification and rectification. The Tribunal rejected the petitions on the ground that in view of Section 35C(2), the Tribunal is entitled to only rectify any mistake apparent on the record or amend any order, if the mistake is brought to its notice. Also the petitions were filed beyond six months. Therefore, the Tribunal held that the petitions were not maintainable. Moreover, the T .....

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the appellant had adopted a lower assessable value than the actual value of clearance, is actually a finding of fact, on which, this Court cannot interfere. No question of law arises in C.M.A.Nos.1949 to 1952 of 2015 to interfere with the common order dated 9.7.2013 passed by the Tribunal. 14. Accordingly, CMA.Nos.1949 to 1952 of 2015 are dismissed. No costs. Consequently, the connected MP is also dismissed. 15. Coming to the remaining four appeals that revolve around the question of payment of .....

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re the said date ? 16. For finding an answer to these questions of law, it may be necessary to take a look at the amendments that were brought forth to Sections 11AA and 11AB first with effect from 11.5.2001 and subsequently with effect from 8.4.2011. 17. Before 11.5.2001, the Scheme of Sections 11A, 11AA and 11AB was to the following effect : (i) Whenever any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may .....

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months from the date of such determination, the person becomes liable to pay interest under Section 11AA, at a rate not below 10% and not exceeding 30%, from the date immediately after the expiry of the said period of three months till the date of payment of such duty; and (iv) If the duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any of .....

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cases where there has been no levy or no payment or short levy or short payment or erroneous refund in the normal course and (b) cases where there has been no levy or no payment or short levy or short payment or erroneous refund due to fraud, collusion, wilful misstatement or suppression of facts. 19. These two categories of cases were treated differently by the statute in so far as the liability to pay interest is concerned. If the case fell under the first category where there is no allegation .....

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under Section 11AB. This is why the date of commencement of the liability to pay interest was the date of original liability and not the date of determination under Section 11AB. Unless we understand this scheme that was prevailing before 11.5.2001, the interpretation that is called for to the provision that exists post amendment with effect from 11.5.2001 or the provisions as they now stand after the amendment dated 8.4.2011, cannot be understood. 21. Now, let us take the amendments that were .....

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e duty, interest at such rate not below ten per cent and not exceeding thirty six percent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such duty from the date immediately after the expiry of the said period of three months till the date of payment of such duty : Provided that where a person chargeable with duty determined under Sub-Section (2) of Section 11A before the date on which the Finance Bill, 1995 receives the assent of .....

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rst determined to be payable. Explanation 2. - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or, as the case may be, the court, the date of such determination shall be, - (a) for the amount of duty first determined to be payable, the date on which the duty is so determined; (b) for the amount of increased duty, the date of order by which the increased amount of duty is first determined to be paya .....

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whether such payment is made voluntarily or after determination of the amount of duty under Section 11A. (2) Interest, at such rate not below ten per cent and not exceeding thirty-six per cent per annum, as the Central Government may, by notification in the Official Gazette, fix, shall be paid in terms of Section 11A after the due date by the person liable to pay duty and such interest shall be calculated from the date on which such duty becomes due up to the date of actual payment of the amoun .....

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ayment of duty: (1) Where any duty of excise has not been levied or paid or has been short levied or short paid or 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 the rules made thereunder with intent to evade payment of duty, the person liable to pay duty as determined under Sub-Section (2) of Section 11A shall, in addition to the duty be liable to pay interest at such rate not below e .....

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doubts, it is hereby declared that the provisions of Sub-Section (1) shall not apply to cases where the duty became payable before the date on which the Finance (No.2) Bill, 1996 receives the assent of the President. Explanation 1 - Where the duty determined to be payable is reduced by the Commissioner (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 incre .....

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all, 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, or from the date of such erroneous refund, as the case may be, but for the provisions contained in Sub-Section (2), or Sub-Section (2B), of Section .....

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erest shall be payable on the whole of the amount, including the amount already paid. (2) The provisions 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, as the case may be, the court, the interest shall be pa .....

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by the amendment inserted from 11.5.2001. Though a small distinction was still retained, the liability to pay interest became common for both categories of cases and a distinction was retained only in respect of the minimum ratio of interest and the date of commencement of liability post 11.5.2001. In cases where the payment was made voluntarily after determination of the amount of duty under Section 11A, the amendment stipulated a minimum rate of interest at 10% per annum and a maximum rate of .....

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orth in 2001 and 2011, if we get back to the cases on hand, it could be seen that the periods, in respect of which, the show cause notices were issued, were all from 1997 to 2000. The show cause notices covered by the Order in Original bearing Nos.18/2000 and 54/2000 were dated 2.4.1998, 1.7.1998, 18.11.1998, 1.4.1999, 30.7.1999 and 1.12.1999 as well as 5.4.2000 and 25.4.2000 respectively. The show cause notices covered by the Orders in Original bearing Nos.42/2001 and 43/2001 were exactly dated .....

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allegation of fraud, collusion, misrepresentation, etc. Even the communication of the Superintendent dated 12.11.2013 does not categorise the case of the assessee as one where there was fraud, collusion, etc. But, the communication of the Superintendent dated 12.11.2013 refers to Section 11AB. Therefore, it is obvious that the amendment dated 11.5.2001 is what is sought to be taken advantage of. This cannot be done at least in respect of two cases that arise out of the Orders in Original bearin .....

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