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TMI Blog2008 (2) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... mentary invoices issued in the wake of revision of price after removal of the goods. At the time of removal of the goods, duty was paid on the assessable value based on the price originally agreed between the assessee and the buyer. Subsequently, there was upward revision of price of the goods due to increase of cost of raw material and/or other factors and, consequently, the assessee issued supplementary invoice for realizing the differential price from the buyer and paying differential duty. Such payment of differential duty was made without payment of interest. In most of the cases, there was no express provision for variation of price in the contract between the assessee and the buyer. However, in such cases also, the buyer agreed for price hike thereby enabling assessee to realize the differential price and pay differential duty. In other cases, there was price variation clause in the relevant contract, which was invoked by the assessee for realizing the differential price from the buyer by issuing supplementary invoice. In all cases, the differential amounts of duty were paid without interest. In each case, after the assessee paid differential duty [without interest] under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the time of removal of the goods. In this view of the matter, there was a short-payment of duty at this time of clearance of the goods, attracting sub-section (2B) of Section 11A. Consequently, interest under Section 11AB was payable on the differential duty paid under supplementary invoice, for the period from the first day of the month succeeding the month in which such duty ought to have been paid to the date of payment of the duty. In this connection, learned SDR has referred to a Circular of CBEC (F. No. 6/20/2005-CX.1 dated 14-3-2006), wherein it was clarified that interest under Section 11AB of the Central Excise Act was chargeable from the date of original clearance in cases where supplementary invoices were raised due to upward revision of price of the goods. Learned SDR has also argued that, inasmuch as the contract between the assessee and and buyer contained a price escalation clause or [where there was no such clause in the contract] the assessee, after clearing the goods, entered into price escalation with the buyer, the assessments made at the time of clearance of the goods should be considered to be provisional for purposes of Rule 7 of the Central Excise Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of another learned Single Member: in Insulators & Electrical Co. v. Commissioner of Central Excise - 2006 (202) E.L.T. 734 (Tri.-Del.) wherein a payment of differential duty made consequent upon revision of price after clearance of the goods was held to be payment of duty 'sort-paid' for purposes of sub-section (2B) of Section 11A and accordingly the assessee was held liable to pay interest under Section 11AB on the differential duty. Learned SDR has also referred to the judgment of the Apex Court in Central Provinces Manganese Ore Co. Ltd. v. Commissioner of Income Tax - (1986) 3 SCC 461 and has argued that the levy of interest under Section 11AB is in the nature of compensation as the Revenue was deprived of the benefit of differential duty for the period during which it remained unpaid. It has also been opined that the decision of the Hon'ble Bombay High Court on the above issue in First Appeal No. 42/2007 [2008 (223) E.L.T.161 (Bom.)] [Commissioner of Central Excise, Aurangabad v. Rucha Engineering Pvt. Ltd.] has to be treated as per incuriam as the decision was rendered without noticing the relevant provisions of Section 4 of the Central Excise Act and Rule 7 of Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty collected from the buyer (under supplementary invoice) in excess of the duty paid at the time of removal of the goods was paid forthwith to the Government, no demand of interest can be made under Section 11DD either. Learned Advocate Shri V. Balasubramanian has argued that, there being no machinery provision for levy of interest in the Central Excise Act, unlike in the Customs Act, any demand under Section 11AB is not enforceable. It has also been pointed out that, in the case of UCAL Systems Ltd. v. Commissioner of Central Excise, Chennai -2007 (216) E.L.T. 370 (Tri. - Chennai), it was held that interest under Section 11AB was not leviable in the absence of determination of duty under Section 11A( 2) of the Act. Learned Counsel has also mooted the proposition that an assessee can not be compelled to do the impossible. It was impossible for the assessees in these cases to have paid the differential duty at the time of clearance of the goods. They could pay it only after they were informed of the price revision and they paid the duty promptly at the time of issue of supplementary invoice. As it was impossible for any assessee to have paid this amount of duty at the time of clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of removal of the goods but also the differential duty paid later. It woulod follow that Sections 11D and 11DD are not applicable to the present cases. The concept of deemed value held the field only up to 30-6-2000. From 1-7-2000, we have an essentially different concept viz, transaction value as defined under Section 4(3)(d) of the Central Excise Act. Admittedly, for the purpose of payment of duty, all the cases before us are covered by Section 4(1)(a) of the Central Excise Act and accordingly the assessable value for payment of duty is the transaction value. Section 4(3)(d) defines 'transaction value' as follows :- "'transaction value' means the price actually paid or payable for the goods when sold, and includes in addition to the amount charged as price, any amount that the buyer is liable to pay to, or on behalf of, the assessee, by reason, or in connection with the sale, whether payable at the time of the sale or at any other time, including, but not limited to any amount charged for or to make provision for, advertising or publicity, marketing and selling organization expenses, storage, outward handling, servicing, warranty, commission or any other matter; but does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, pay the amount of duty on the basis of his own ascertainment of such duty before service of notice him under sub-section (1) and inform the Department of such payment so that service of such notice can be avoided. In the present cases, the assessees were virtually acting in terms of sub section (2B) of Section 11A. Sub-section (2B) [with the Proviso and Explanations thereto] is reproduced below:- "(2B) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise officer before service of notice on him under sub-section ( in respect of the duty, and inform the Central Excise officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid : Provided that the Central Excise officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such amount in the manner specified in this Section, and the period of "one year" referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount paid by the person under sub-section (2B) of Section 11A. This, in our view, is a clear indication of the legislative intent. The law considers that the payment of short-paid duty self-ascertained by an assessee and paid under intimation to the Central Excise officer in terms of Section 11A(2B) is a belated payment of duty. This delay can only be with reference to the time of removal of the goods. The argument that, there being no delay in the payment of such duty with reference to the time of price increase [or with reference to the time of issue of supplementary invoice], the question of payment of interest does not arise will render Explanation 2 nugatory. The provisions of Section 11AB also shall have to be construed so as to avoid anomalous situations. Sub-section (1) of Section 11AB, without its proviso, reads as under:- "[11AB. Interest on delayed payment 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, the person who is liable to pay duty as determined under sub-section (2), or has paid the duty under sub-section (2B), of section 11A. shall, in addition to the duty, be liable to pay i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o is the differential duty which is found payable on ascertainment under sub-section (2B) of Section 11A. Therefore, the demand of interest under Section 11AB on the amount of duty paid under Section 11A (2B) from the first day of the month succeeding the month in which the duty ought to have been paid cannot be resisted. The defence of impossibility was taken to resist the demand of interest. The argument is that it was impossible for the assessee to have paid the differential amount of duty [which was occasioned by subsequent price revision] at the time of clearance of the goods and therefore it cannot be said that such duty "ought to have been paid" at the time of clearance of the goods. It is argued that the law cannot ask a person to do the impossible. This "doctrine", in our view, cannot be invoked by any person who himself failed to do the possible, to do what the law required him to. In the present case, as we have already observed, the assessees were placed in such a situation at the time of removal of the goods that they should have resorted to provisional assessment under Rule 7 of the Central Excise Rules, 2002. Had they done so, they would have been liable to pay inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erential price should be deemed to have been paid at the lime of removal of the goods. In the circumstances, in our view, the Revenue is entitled to plead that the payment of differential duty under supplementary invoice was payment of duty short-paid with reference to the date of removal of the goods. The denial of interest on such amount under Section 11AB would mean refusal to compensate the Government for the loss incurred on ac count of such duty having remained unpaid for a period of time. As we have already observed, the assessees had a statutory obligation to resort to provisional assessment, but this was not done, thereby depriving the Revenue of its right to levy interest under sub-rule (4) of Rule 7 of the Central Excise Rules, 2002. Having regard to this conduct of the assessees, we are of the view that, on the principle of compensation, the assessees are liable to pay interest under Section 11AB on the differential duty covered by the supplementary invoices for the period specified under that Section. 6. For the reasons recorded hereinbefore, we are in agreement with the view taken by the learned Single Members in Inducto Cast ..... X X X X Extracts X X X X X X X X Extracts X X X X
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