M/S. M.M. Forgings Ltd vs Cce, Madurai

(Arising out of Order-in-Appeal No. 40/2007 dated 30.03.2007, passed by the Commissioner of Central Excise (Appeals), Madurai).

For approval and signature

Honble Shri R. PERIASAMI, Technical Member

M/s. M.M. Forgings Ltd. : Appellant

Vs.

CCE, Madurai : Respondent

Appearance

None for the appellant

Shri K.P. Muralidharan, AC (AR), for the respondent

CORAM

Honble Shri R. PERIASAMI, Technical Member

Date of Hearing/Decision: 24.03.2015

FINAL ORDER No. 40341 / 2015

Vide letter dated 20.03.2015, the appellant intimated that in their absence the appeal may be decided on merits. The appeal is taken up for disposal.

2. The short issue involved in this case relates to demand of interest against the delayed payment of duty on supplementary invoices raised by the appellant. The adjudicating authority confirmed the demand of Rs.31,944/, which was upheld by the Commissioner (Appeals).

3. The Ld. AR reiterated the findings of the Commissioner (Appeals) and the adjudicating authority. He relied on the following decisions of the Honble Supreme Court in support of his contention.

1. CCE, Pune Vs. SKF India Ltd.

2009 (239) ELT 385 (S.C)

2. CCE Vs. International Auto Ltd.

2010 (250) ELT 3 (S.C.)

4. After hearing the Ld. AR and on perusal of the records, I find that the short issue in this case relates to demand of interest against the delayed payment of duty on supplementary invoices. Both the authorities below have brought out in detail and also relied on Honble Supreme Court decision in the case of Commissioner of Trade Tax (UP) Vs. Kanhai Ram Thekedar  2005 TIOL-76-SC-CT and the Tribunals decision in the case of K. Ramkumar Vs. CCE  2006 (193) ELT-504 (Tri.) There is no dispute on the fact that the appellant has paid the differential duty against the supplementary invoices raised by them. Further, they have failed to pay the interest. The issue has been settled by the Honble Supreme Court in the case of SKF India Ltd. (supra) and International Auto Ltd.(supra). The relevant portion from International Auto Ltd., is reproduced below:-

"8.?Section 11A of the Act deals with recovery of duty not levied or not paid or short-levied or short-paid. The said section, which stood inserted by Act 25 of 1978, underwent a sea-change when Parliament inserted major changes in that section vide Act 14 of 2001 [with effect from 11th May, 2001] and Act 32 of 2003 [with effect from 14th May, 2003]. It needs to be mentioned that simultaneously Act 14 of 2001 also made changes to Section 11AB of the Act. In the case of S.K.F. India Limited [supra], it has been, inter alia, held, as can be seen from the above-quoted paragraphs, that sub-section 2(B) of Section 11A 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 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 2(B) 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 indicates short-payment/short-levy on the date of removal, hence, interest which is for loss of revenue, becomes leviable under Section 11AB of the Act. In our view, with the entire change in the Scheme of recovery of duty under the Act, particularly after insertion of Act 14 of 2001 and Act 32 of 2003, the judgement of this Court in the case of M.R.F. Limited [supra] would not apply.

That judgement was on interpretation of Section 11B of the Act, which concerns claim for refund of duty by the assessee. That judgement was in the context of the price list approved on 14th May, 1983. In that case, assessee had made a claim for refund of excise duty on the differential between the price on the date of removal and the reduced price at which tyres were sold. The price was approved by the Government. In that case, the assessee submitted that its price list was approved, by the Government on 14th May, 1983, but subsequent thereto, on account of consumer resistance, the Government of India directed the assessee to roll back the prices to pre-14th May, 1983 level and on that account, price differential arose on the basis of which the assessee claimed refund of excise duty which stood rejected by this Court on the ground that once the assessee had cleared the goods on classification, the assessee became liable to payment of duty on the date of removal and subsequent reduction in the prices for whatever reason cannot be made a matter of concern to the Department insofar as the liability to pay excise duty was concerned.

In the present case, we are concerned with the imposition of interest which, as stated above, is charged to compensate the Department for loss of revenue. Be that as it may, as stated above, the Scheme of Section 11A of the Act has since undergone substantial change and, in the circumstances, in our view, the judgment of this Court in the case of M.R.F. Limited [supra] has no application to the facts of this case. In our view, the judgment of this Court in the case of SKF India Limited [supra] is squarely applicable to the facts of this case."

The ratio of the above decision by the Honble Supreme Court squarely applies to the facts of the present case. Hence, I do not find any infirmity in the impugned order. Accordingly, the impugned order is upheld and the appeal filed by the party is rejected. (Order pronounced and dictated in the open Court)

(R. PERIASAMI) TECHNICAL MEMBER

BB

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