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Judgment
The revenue has preferred these appeals challenging the order passed by the Tribunal which held that no interest is payable on the duty paid on supplementary invoices.
The assessee is engaged in the manufacture of excisable goods. Despite having Central Excise Registration there was delay in payment of duty by the assessee. The said duty liability was due to the reason that purchase orders price got enhanced subsequently after the negotiation. The assessing authority held that the assessee should have discharged the duty liability along with interest. However, the assessee contended that they had discharged the duty liability as soon as they were informed about the escalation in the price and hence they are not liable to pay interest and penalty. The adjudicating authority did not accept the said stand. Therefore, it confirmed the demand of interest but refrained from imposing penalty on the appellant. The Commissioner (Appeals), set aside the adjudication order and directed that the lower authority to impose appropriate penalty. The assessee preferred an appeal to the Tribunal. The Tribunal not only set aside the imposition of penalty but also set aside the confirmation of payment of interest. An appeal came to be filed before this Court. This Court in Appeal No. 46/2006 upheld the order of the Tribunal in so far as setting aside the penalty is concerned but in so far as the interest is concerned, the matter was remitted back to the Tribunal for consideration afresh. On such remand the Tribunal has held relying on the Judgment of the Gujarat High Court in The Commissioner of Central Excise and Customs Vs. Chloritech Industries, that there is no liability to pay interest Aggrieved by the said order, the revenue is in appeal.
This question whether the interest is leviable when a supplementary invoice was raised after the escalation of price came up for consideration in the case of Commissioner of Central Excise vs. M/s. Pressom Products in CEA 16/2008 disposed off on 7th March, 2011. After reviewing the case law on the point this Court has held as under.-
The aforesaid statutory provisions and the law declared by the Apex Court in the aforesaid two judgments make it clear that, interest is leviable on delayed or deferred payment of duty for whatever reasons. 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). Non-issue of a demand notice under subsection (1) is nothing to do with leviability of interest for delayed payment. Explanation 2 in the sub-section (2B) makes it expressly dear that such payment would not be exempt from interest chargeable u/s 11AB. What is stated in Explanation 2 to subsection (2B) is reiterated in Section 11AB which 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 subsection (28) of Section 11A, in addition to the duty, be liable to pay interest. Interest is levied foe loss of revenue on any count. The 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 u/s 11AB of the Act. The said non-payment or short payment of duty may be not intentional. Whatever may be the reason even if the assessee is not at fault on any count, as the duty payable in law is not paid on the value of the goods on the date of removal, the payment of interest is attracted to bridge the loss of revenue. When the legislature consciously inserted these provisions in Section 11AB, the legal effect flowing from such provisions is to be given effect to. Therefore, a harmonious reading of the aforesaid provision makes it clear that interest is leviable on the differential duty paid in pursuance of a subsequent invoice as the proper duty payable under the law had not been paid on the date of clearance.
Therefore the order of the Tribunal that the interest is not liable to be paid on the corrected value is erroneous and requires to be set aside. However, in the aforesaid Judgment this Court after holding that the interest is liable to be paid has given the benefit to the assessee on the basis of the Circular/Instruction F. No. 390/Misc./163/2010JE/2010 JC in respect of Litigation-Monetary limits for department Appeals before CESTAT and High Courts. The reasoning adopted by this Court in the aforesaid Judgment granting the benefit to the assessee equally applies in this case also. Accordingly, we pass the following order: -
The substantial question of law is answered in favor of the revenue and against the assessee. However, the payment of interest by virtue of the order which is now restored abates in view of the Circular issued by the Government.