Tamilnadu Petroproducts Ltd vs Commissioner Of Central Excise

[Arising out of Order-in-Original No.27/2007 dated 31.10.2007 passed by the Commissioner of Central Excise, Chennai-I]

Tamilnadu Petroproducts Ltd. Appellant

Versus

Commissioner of Central Excise, Chennai-I (now sought to be changed as Commissioner of Central Excise, LTU Chennai) Respondent

Appearance:

Ms. Karthika Prasad, Advocate For the Appellant Shri B. Balamurugan, AC (AR) For the Respondent

CORAM:

Honble Shri R. Periasami, Technical Member

Date of hearing/decision :17.6.2015

FINAL ORDER No.40659/2015

1. Appellant filed MISC petition for change of cause title of respondent's name from Commissioner of Central Excise Chennai-I to Commissioner of Central Excise, LTU, Chennai. Accordingly, the change of cause title is allowed. Registry is directed to amend the cause title accordingly. MA is disposed.

2. The appellant filed appeal against Commissioner's order dt. 31.10.2007.

3. The brief facts of the case are that the issue relates to demand of interest on the belated payment of differential duty by the appellant for the period from November 2005 to December 2006. Consequent on Tribunal's order dt. 4.8.2005 wherein the Tribunal upheld merit of the case, the appellants on their own discharged the duty on the higher value and subsequently worked out correct value as per CAS-4 for every quarter and paid differential duty in the following month. The adjudicating authority issued notice dt. 8.8.2007 demanding interest on the differential duty paid during the above period. In the impugned order, the adjudicating authority confirmed the demand of interest of Rs.5,19,376/- under Section 11AB.

4. Ld. Advocate for the appellant submits that Tribunal in their first order No.1079-1081/2005 dt. 4.8.2005 and second order No.593/2006 dt. 11.7.06 upheld the demand on merits holding that both the parties are related. She further submits that they have filed civil appeals before the Hon'ble Supreme Court against aforesaid Tribunal orders and are still pending. Pending outcome of the decision of the Hon'ble Supreme Court, they started paying duty as per the Tribunal's order and worked out the value as per CAS-4 and paid the differential duty next month of every quarter. Therefore, there is no demand of interest. She submits that initially they have worked out the value as per their own method and calculated 110% of cost of production whereas the jurisdictional Superintendent of Central Excise has pointed that the CAS-4 value of the respective quarter has to be adopted for the determination of differential duty. Therefore, they have recalculated the CAS value and paid differential duty. There is no delay in payment of duty and the duty was immediately paid after arriving at CAS-4 value. She also submits that they have paid differential duty under protest. She relied para-4 of the memorandum of appeal and also submits copy of protest letter.

5. On the other hand, Ld. A.R reiterates the finding of the OIO. He submits that in the present case appellants are discharging duty on self-assessment and paid differential duty. Therefore any belated payment of duty paid as per Section 11A (2B), interest is automatic and payable under section 11AB. Accordingly, interest has been rightly demanded. Appellants have not opted for provisional assessment. They started paying duty on their own on the higher value and subsequently they paid differential duty as per CAS-4 formula. He submits that interest is payable from the date of Tribunal's order. He relied on the following citations :-

(i) CCE Pune Vs SKF India Ltd.

2009 (239) ELT 385 (SC)

(ii) Gammon India Ltd. Vs CCE Nagpur 2012 (290) ELT 171 (Bom.)

(iii) CCE Vs International Auto Ltd.

2010 (250) ELT 3 (SC)

6. Heard both sides. The short issues in this case is demand of interest payable on the differential duty paid belatedly. In the present case, there is no demand of central excise duty as the appellants paid differential duty by self-assessment under Section 11A (2B). The adjudicating authority dealt the issue in detail at para 10 to 15 and clearly held that assessee are covered under sub-section (2B) of Section 11A of Central Excise Act. I find that when appellant could not quantify the value as per CAS, they ought to have opted for provisional assessment. Instead they chose to pay differential duty for every quarter on self-assessment. Once the differential duty is paid it is covered under Section 11A (2B) and interest is automatic. In this regard, I rely on the Hon'ble Supreme Court's decision in the case of CCE Pune Vs SKF India Ltd. (supra) wherein the Hon'ble apex court on the identical issue held that once the duty is paid and the differential duty is covered under sub-section (2B) of Section 11A, interest is payable under Section 11AB. The relevant paras 9 to 15 of the said apex court judgement are reproduced as under :-

"9.?Section 11A puts the cases of non-levy or short levy, non-payment or short payment or erroneous refund of duty in two categories. One in which the non-payment or short payment etc. of duty is for a reason other than deceit; the default is due to oversight or some mistake and it is not intentional. The second in which the non-payment or short payment etc. of duty is by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty; that is to say, it is intentional, deliberate and/or by deceitful means. Naturally, the cases failing in the two groups lead to different consequences and are dealt with differently. Section 11A, 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 (1A) of Section 11A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2B).

10.?Sub-section (2B) of Section 11A 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 sub-section (1). But Explanation 2 to the sub-section makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11AB, 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. What is stated in Explanation 2 to sub-section (2B) is reiterated in Section 11AB 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 (2B) of Section 11A, 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 non-payment or short payment etc. of duty is by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty, under the scheme of the four Sections (11A, 11AA, 11AB & 11AC) interest is leviable on delayed or deferred payment of duty for whatever reasons.

11.?The payment of differential duty by the assessee at the time of issuance of supplementary invoices to the customers demanding the balance of the revised prices clearly falls under the provision of sub-section (2B) of Section 11A of the Act.

12.?The Bombay High Court, Aurangabad Bench, in its decision in The Commissioner of Central Excise, Aurangabad v. M/s. Rucha Engineering Pvt. Ltd., (First Appeal No. 42 of 2007) that was relied upon by the Tribunal for dismissing the Revenues appeal took the view that there would be no application of Section 11A (2B) or Section 11AB where differential duty was paid by the assessee as soon as it came to learn about the upward revision of prices of goods sold earlier. In M/s. Rucha Engineering the High Court observed as follows:

It is evident that the Section (11AB) comes into play if the duty paid/levied is short. Both, the Commissioner (Appeals) and the CESTAT have observed that the Assessee paid the duty on its own accord immediately when the revised rates became known to them from their customers. The differential duty was due at that time i.e. when the revised rates applicable with retrospective effect were learnt by the Assessee, which was much after the clearance of the goods and therefore, question of payment of interest does not arise as the duty was paid as soon as it was learnt that it was payable. Finding that provisions of Section 11A (2) and 11A (2B) were not applicable as the situation occurred in the instant, case was quite different, Section 11AB (1) was not at all applicable, and therefore, the Assessee was not required to pay interest.

13.?It further held that a case of this nature would not fall in the category where duty of excise was not paid or short-paid.

14.?We are unable to subscribe to the view taken by the High Court. It is to be noted that: the assessee was able to demand from its customers the balance of the higher prices by virtue of retrospective revision of the prices. It, therefore, follows that at the time of sale the goods carried a higher value and those were cleared on short payment of duty. The differential duty was paid only later when the assessee issued supplementary 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 (2B) of Section 11A and attracted levy of interest under Section 11AB of the Act.

15.?for the reasons discussed above we set aside the judgments and orders passed by the Tribunal and the Commissioner (Appeals). We restore the order passed by the Assistant Commissioner in so far as charge of interest is concerned. On the facts of this case there is no question of imposition of any penalty. Hence, that part of the order of the Assistant Commissioner is set aside."

7. Further the Hon'ble Supreme Court in the subsequent judgement in the case of CCE Vs International Auto Ltd. (supra) also upheld that demand of interest under Section 11AB by referring to their order in the case of SKF India Ltd. (supra).

8. In view of foregoing decisions, the issue relating to demand of interest on the differential duty paid stands settled by the apex court. By respectfully following the judgement of apex court, I hold that appellants are liable to pay interest demanded in the impugned order. Accordingly, the impugned order is upheld. Appeal is dismissed.

(Dictated and pronounced in open court)

(R. PERIASAMI) TECHNICAL MEMBER

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