2019 Supreme(SC) 555

SUPREME COURT OF INDIA
RANJAN GOGOI, CJI., UDAY UMESH LALIT, K.M. JOSEPH, JJ.
M/S. Steel Authority of India Ltd. – Appellant
Versus
Commissioner of Central Excise, Raipur – Respondent
Civil Appeal No. 2150, 2562 of 2012, Civil Appeal No.600, 1522-23, 59 of 2013
Decided On : 08-05-2019

IMPORTANT POINTS
Price u/s 11AB means price actually paid or payable including escalation.
Levy of interest a part of the adjective law but not without a substantive provision.
When the assesee knows that the value of goods was amenable to upward revision, he should invoke Rule 7 and seek an order for provisional assessment.
In case of non-levy, non-payment, short-levy and short-payment of duty, assessee becomes liable to pay interest from the first date of the month succeeding the month in which duty ought to have been paid
When on account of price escalation differential excise duty is paid voluntarily, there will be no need for determination of duty or issuance of notice u/s 11A.
In case of short levy ingredients of assessment are (1) rate of duty (2) valuation and (3) quantity removed.
In case of price escalation with retrospective effect enhancement of value dates back to the dates of removal. Liability for payment of differential duty arises when the differential price due to retrospective escalation occurs, though received later.

Headnote:(a) Central Excise Act, 1944 - Section 11AB - Revision in price - Excise duty and interest thereon - Value of goods u/s 4(a) - Price actually paid or payable including escalation. (Para 15, 16)

       (b) Central Excise Rules, 2002 - Rules 4,5,6,7 and 8 - Duty on excisable goods to be paid by 5th of following month except in March when it is payable by 31st March - Failing which interest would be payable - Self assessment - Under Rule 7, in case of non-determination of price at the time of removal, assessee required to seek permission to make provisional assessment - Final assessment to be made within six months of permission. (Para 18, 49)

       (c) Central Excise Rules, 2002 - Rules 7 - Levy of interest a part of the adjective law - But not without a substantive provision - Demand for interest can be made under legislative mandate. (Para 22, 25)

       (1997) 5 SCC 104; (2015) 10 SCC 715; (1997) 6 SCC 479 - Relied upon

       (d) Central Excise Act, 1944 - Section 11A and Section 11AB r/w Rule 6 and 7, Central Excise Rules, 2002 - Attracted only when full value of goods was known at the time of removal and there was a case of non-levy, non-payment, short-levy or short-payment of duty or erroneously refunded duty - Instantly, price not fixed at the time of removal - Assesee must be in the know that value was amenable to upward revision - Ought to invoke Rule 7 and seek an order for provisional assessment - Held assessee liable for payment of interest on differential value of duty. (Para 35, 36, 43)

       (e) Central Excise Act, 1944 - Section 11A and Section 11AB - Duty determined or paid - In case of paid non-levy, non-payment, short-levy and short-paid - Assessee becomes liable to pay interest from the first date of the month succeeding the month in which duty ought to have been paid - Month refers to the month of removal of the goods. (Para 47, 50)

       (f) Central Excise Act, 1944 - Section 11AB r/w Rule 8, Central Excise Rules, 2002 - Expression “the month in which the duty ought to have been paid” - Has same meaning in the two provisions. (Para 51)

       (g) Central Excise Act, 1944 - Section 11A(2)(b) - Appellant paying differential excise duty of Rs.142.78 crores voluntarily - The payment to be treated as one falling u/s 11A(2)(b) - No need for determination of duty or issuance of notice u/s 11A. (Para 53)

       (h) Section 11A - Non-levy, short levy, not paid or short paid duty - Becomes recoverable notwithstanding approval, acceptance or assessment either relating to the rate of duty or the valuation under the Act and the Rules. (Para 54)

       (i) Central Excise Act, 1944 - Section 11AB r/w Rule 8 - Expression short levy - Ingredients of assessment: (1) rate of duty (2) valuation and (3) quantity removed. (Para 58)

       (j) Central Excise Act, 1944 - Section 11AB r/w Rule 8 - Subsequent escalation in price with retrospective effect - Will affect the valuation employed in the self-assessment by the assessee which would necessarily be provisional - Enhancement of value will date back to the dates of removal in view of the retrospective operation - Liability for payment of differential duty arises when the differential price due to retrospective escalation occurs, though received later - Instantly consequential differential duty on such escalated price being admittedly payable - Held, Section 11A read with Section 11AB would apply. (Para 59, 60)

       (2015) 10 SCC 715; (1997) 6 SCC 479 - Relied upon

       (2015) 16 SCC 107; (1994) 6 SCC 563; (1995) Supplement 3 SCC 429; (1999) 7 SCC 633; AIR 2003 SC 843; (2004) 3 SCC 48; 1978 E.L.T. (J 399) - Referred

       AIR 1954 SC 470; AIR 1964 SC 1653; (2001) 3 SCC 76; (2005) 4 SCC 779 - Distinguished

       (k) Central Excise Act, 1944 - Section 11AB r/w Rule 8 - Duty and assessment does not become payable from the month when final assessment is made - It relates to month of every removal - When price is known to be revised from retrospective effect the duty paid at the time of removal can only be provisional - Matter would be different if price revision is not contemplated initially or is prospective. (Para 62, 63)

       (2009) 13 SCC 461; (2010) 2 SCC 672 - Affirmed

       (1997) 5 SCC 104 - Overruled

       Facts of the case:

       The question arising in this case is as to whether interest is payable on the differential excise duty with retrospective effect that become payable on the basis of escalation clause under Section 11AB of the Central Excise Act, 1944.

       The appellant company which is manufacturer of various products including rail sold the same to the Indian Railways. The products were cleared on sale from 1st January, 2005 to July 2006. The goods were cleared on the payment of excise duty on the payment of price which was fixed based on their circular dated 24.04.2005. Subsequently, the prices were enhanced by way of price circular dated 20.07.2006. The revision came into effect with retrospective effect. It is based on the same that SAIL deposited Rs.142 crores by way of excise duty. This was done in August 2006. Thereupon, the officers of the department indulged in correspondence with SAIL seeking details regarding the clearances which were effected. On the basis of material made available, SAIL was called upon to remit interest under Section 11AB of the Act. SAIL filed its objections. It is after considering the objections, the authority found that SAIL was liable to pay interest on a sum of Rs.142 crores calculated based on the date of removal of the goods during the period from January, 2005 to July,2006. Various objections raised by the appellants were dealt with and they were found merit less. An appeal was carried before the Tribunal. The Tribunal relied upon the judgment of this Court in SKF India Ltd. Case (supra) and accordingly dismissed the appeal. Thereafter when the matter came up before this Court, a Bench of two learned judges after elaborately hearing the matter doubted the correctness of the decision in SKF case and also International Auto and hence the cases were referred to the larger Bench.

       Finding of the Court:

       (2009) 13 SCC 461 and (2010) 2 SCC 672 laid down correct law.

       Result: Appeals dismissed.