Custom, Excise & Service Tax Tribunal
S.M. Auto Engineering Pvt. Ltd vs Commissioner Of Central Excise, Pune-I on 28 September, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/208/2009-Mum. (Arising out of Order-in-original/appeal No dated passed by the Commissioner of Customs (Appeals) & Central Excise ) For approval and signature: Honble Mr. Sahab Singh, Member (Technical) ============================================================
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S.M. Auto Engineering Pvt. Ltd.
:
Appellant
Vs.
Commissioner of Central Excise, Pune-I
Respondent
Appearance:
Shri S.A. Gundecha, Advocate for appellant
Shri Sanjay Kalra, Appraiser (A.R.) for respondent
CORAM:
Mr. Sahab Singh , Member (Technical)
Date of hearing : 28/9/2011
Date of decision : /2011
ORDER NO.
This is an appeal arising out of Order-in-Original No. 19/Central Excise/2008 dated 21st November, 2008 passed by Commissioner of Central Excise, Pune.
2. Brief facts of the case are that M/s. S.M. Auto Engineering Pvt. Ltd. (hereinafter referred to as appellants) are manufacture of motor vehicle parts. During the relevant period they supplied the goods to certain motor vehicle manufacturers on payment of duty based on mutually agreed price. Later on, both parties agreed to enhance the price of the goods invoking the price escalation clause contained in the original contract. Differential duty on the differential value on account of enhancement was paid by the appellants during the period July 2003 to March 2007. Later on, a show-cause notice was issued to the appellants seeking to recover interest on the differential duty amount for the period from the date of clearance of the goods to the date of payment of differential duty. The show-cause notice was adjudicated by the Commissioner and interest amounting to Rs.8,41,078/- was confirmed. On an appeal filed by appellant this Tribunal. Vide order No. A/199/WZB/MUM/2009/SMB/C-IV dt. 13.5.2009 set aside the order of the Commissioner and allowed the appeal. Department filed an appeal in Supreme Court against the order passed by the Tribunal and the Honble Supreme Court vide order dt. 25.8.2010 remanded the case back to the Tribunal order as under:-
Appeal Admitted.
In view of our judgment in the case of Commissioner of Central Excise, Pune Vs. S.K.F. India Ltd., reported in 2009 (239) ELT 385 (S.C.), the present Appeal stands disposed of by remitting it to the Tribunal for de novo consideration in accordance with law.
This order is passed in view of and in the light of a similar order passed by this Court in Civil Appeal No. 8147 of 2009.
3. Learned Counsel appearing for the appellants submitted that as the supplementary invoices were issued by the appellants claiming the differential value of the goods supplied earlier and as the duty payment was made in the month in which such supplementary invoices raised, the question of confirmation of demand as per provisions of the Act does not arise. As the show-cause notice was issued under Section 11A of the Act and duty payment was made before the issuance of the show-cause notice there was no question of confirmation of payment of interest. He further contended that the Ld. Commissioner has confirmed the duty amount of Rs.2,21,85,987/- under Section 11A (2B) of the Central Excise Act, which was not invoked in the show-cause notice and therefore Commissioner had gone beyond the scope of the show-cause notice. He further argued that the provisions of Section 11A(2B) are applicable only and only when the duty has not been paid or has been short levied. The learned Commissioner did not consider the time aspect of the liability to pay duty on the additional consideration received by the appellant under the provisions of Section 4(1)(a) read with Section 4(3)(d). Only when the additional amount becomes receivable or received that is the time when such additional consideration becomes the part of the transaction value of the goods cleared earlier and the date on which such additional amount becomes payable or paid to the manufacturer should be relevant for the purpose of calculating the duty and interest. He further submitted that goods were cleared earlier as per the original purchase order when the purchase order was amended than the supplementary invoices were issued than only the additional amount was recoverable from their customer and the additional consideration became the part of transaction value on the date on which the supplementary invoices were raised by the appellant and therefore no interest can be recovered from the appellant either as per the provision of Section 11AB of the Act or Rule 8 of the Rules. He further contended that the interest under Section11AB can be recovered only and only when there a short payment of duty, and such short payment is determined as per provisions of Section 11A of the Central Excise Act. Since the duty was paid along with the raising of supplementary invoices, no duty could have been determined under Section 11A(2) of the Central Excise Act and in these circumstances no interest is payable by them under Section 11AB of the Act. He referred to the various case laws in support of his case as under:-
1] Commissioner of Customs, Mumbai Vs. Toyo Engineering India Ltd.
[2006 (201) E.L.T.513 (S.C.)] In this case it was held the department cannot travel beyond show- cause notice.
2] Commissioner of Central Excise, Bangalore Vs. Brindavan Beverages (P) Ltd.
[2007 (213) E.L.T. 487 (S.C.)] In this case it was held that the show-cause notice is foundation on which the Department has to build up in this case if the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the notice was not given proper opportunity to meet the allegations indicated in the show cause notice.
3] Commissioner of C. Ex. & C. Vadodara-I Vs. Chloritech Industries 2009 (235) E.L.T. 17 (Guj.) wherein it was held by the Honble Gujarat High Court that interest under Section 11AB of the Central Excise Act is not recoverable when the differential duty is paid on the price variation.
4. The learned authorized representative of the Revenue submitted that the department has gone in appeal against the order passed by the Tribunal and the Honble Supreme Court has remanded the case back to the Tribunal for de novo consideration in the light of the Supreme Court decision in case of Commissioner of Central Excise, Pune Vs. SKF India Ltd. reported in 2009 (239) ELT 385 (S.C.). He submitted that in the case of SKF India Ltd. it was held by the Honble Supreme Court in Para 10 & 11 that 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 provision of sub-section (2B) of Section 11A of the Act. He further submitted that the Supreme Court relying on its decision in SKF (India) Ltd. has further confirmed these views in the case of Commissioner of Central Excise Vs. International Auto Ltd. reported in 2010 (250) E.L.T. 3 (S.C.) holding that price indicated by the supplementary invoices is directly relatable to the value of the goods on the date of clearance, and held that differential duty when paid after the clearance, it indicates the short- payment/short-levy on the date of removal, and hence, interest becomes leviable.
5. After hearing both the sides, I find that the issue involved in the present case is whether interest under Section 11AB of the Central Excise Act is chargeable on the differential duty paid by the assessee on account of raising of supplementary invoices. I find that show-cause notice in this case was issued to the appellant on 21.8.2007 asking the appellant as to why the amount of Rs.2,21,85,987/- paid by the assessee should not be confirmed under proviso to Section 11A(1) of the Central Excise Act, 1944 and the interest amounting to Rs.8,41,078/- should not be charged and covered under Section 11AB of the Central Excise Act. Commissioner in her order has confirmed the differential amount under Section 11A(2B) and the interest has been demanded under Section 11AB of the Central Excise Act. The show-cause notice has given all details of the allegation explaining all the facts of the case. Therefore, the contention of the appellant that show-cause notice was vague and did not disclose all the grounds is not tenable and the ratio of the decision cited by the Counsel are not applicable in this case.
6. I find that the issue regarding levy of interest on the differential value on account of supplementary invoices raised by the assessee to their customer stands settled by the Supreme Court in the case of SKF India Ltd. (supra). In paragraphs 10 & 11 of the judgement Supreme Court has held as under:-
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 92B) 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 willful 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.
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 provisions of sub-section (2B) of Section 11A of the Act.
It was further held by the Supreme Court in the case of Commissioner of Central Excise Vs. International Auto Ltd. (supra) that differential duty when paid after the clearance, it indicates short-payment/short-levy on the date of removal, hence interest becomes leviable. Therefore, in view of these two decisions of the Supreme Court the interest is recoverable from the appellant on the amount of Rs.2,21,85,987/- which amounts to short-payment of duty on the date of removal and accordingly the interest under Section 11AB is recoverable from the appellant. The appeal is therefore dismissed.
(Pronounced in Court on ) (Sahab Singh) Member (Technical) Sm ??
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