- (1.) In this Tax Appeal the following substantial questions of law have been raised: i) Whether, the assessment made without observing the procedures laid down in rule 7 of the Central Excise Rules, 2002, be considered as provisional? ii) Whether interest under SubRule 4 of the Rule 7 of the Central Excise Rule, 2002 is leviable, even if such assessment is deemed provisional? iii) Whether, subsequent payment of differential duty on account of retrospective price escalation of excisable goods shall be deemed to be a case of short assessment and short levy of such goods cleared earlier and, as such interest shall be demandable in terms of Section 11A and 11AB of the Central Excise Act, 1944? It is submitted by counsel for the appellant that the respondent was engaged in manufacturing of prestressed sleeper for Railways and for independent buyers. The respondentassessee entered into a contract with the Railway and there was a Price Escalation Clause which was to neutralize the effect of increase in the value of inputs. The respondent assessee received differential value of goods at regular interval and paid Central Excise Duty when the calculation is finalized, but, no interest was paid thereupon as required under Rule 7 (4) of Central Excise Rules, 2002 to be read with Section 11AB of Central Excise Act, 1944. The respondentassessee never gave any declaration that there is a Price Escalation Clause in the contract with the Railway. No declaration was ever given by the respondent that the price at which the goods were sold is not final i.e. the price of the goods declared are provisional and, therefore, the respondent was directed to pay interest on differential duty. The respondent had not paid the interest hence a show cause notice dated 23rd April, 2004 was issued alleging therein that the duty paid at a later date from the date of removal of goods attracts interest Under Section 11 AB to be read with Rule 7 of Central Excise Rules, 2002. One more show cause notice dated 26/27.7.2004 was given to the effect that interest of Rs. 40,545/ has been demanded. Both the show cause notices were adjudicated upon and the order in original was passed by Assistant Commissioner, Central Excise, Division IV Jamshedpur on 7.4.2002. The demand was confirmed as mentioned in both show cause notices against which an Appeal was preferred bearing Appeal No. 193/JSR/CEX/Appeal/2005 which was decided by the Commissioner (Appeal) Customs and Central Excise, Patna vide order dated 06.09.2005 whereby, the Appeal preferred by the respondent was dismissed mainly on the ground that duty paid at a later date from the date of removal of goods and whenever there is a price escalation claimed by the assessee, he ought to have apply for provisional assessment under Rule 7 of the Rule 2002, otherwise, as per Rule 7 (4) also there is provision for taking interest upon late payment of Central Excise Duty. Against the said order an Appeal was preferred by the respondent being Appeal no. ESM391/2005 before the Custom Excise and Service Tax Appellate Tribunal, Eastern Region Bench, Kolkata (CESTAT). This Tribunal allowed the Appeal upon the assessment that as the respondentassessee had paid the differential duty after receiving the price escalation the earlier assessment was provisional in nature. This presumption is unwarranted and uncalled for as submitted by the counsel for the appellant. There is nothing like such deeming provision, neither in the Central Excise Act nor under the Rules. Counsel for the appellant has relied upon decisions rendered by the Hon'ble Supreme Court reported in (2009)13 SCC 461 and (2002) 146 ELT 241(SC). It is submitted by counsel for the appellant that in view of these decisions and 7(1) and 7 (4) of the Rules, 2002 to be read with Section 11 AB as there was no application preferred by the respondent for provisional assessment and as there is no deeming provision for provisional assessment and as the respondent had paid duty at a much belated stage after removal of the goods, the respondentassessee is bound to make payment of interest and, therefore, the substantial questions of law may be answered accordingly.
(2.) Counsel appearing on behalf of respondent submitted that no error has been committed by the CESTAT, Kolkata in allowing the Appeal preferred by the respondent. What will be the price escalation was not known to the respondentassessee nor it was certain to get the price escalation. Moreover, the respondent has already paid the differential duty no sooner did the price escalation has been received by the respondent. These aspects of the matter have been properly appreciated by the CESTAT, Kolkata and hence, this Appeal may not be entertained by this Court as no substantial question of law is involved in this Tax appeal even otherwise also the amount involved in this Appeal is less than 50,000/ (fifty thousand) so this Appeal may not be entertained by this Court. REASONS:
(3.) Having heard counsel for both sides and looking to the facts and circumstances of the case, it appears that the respondent is manufacturing Prestressed Sleeper for Railway and for independent buyers. The respondent has entered into a contract with Railway to supply prestressed sleeper having clause of Price Escalation to neutralize the effect of increase in the value of inputs. It further appears from the facts of the case that respondent received differential value of the goods of escalated price at regular interval. The respondent paid differential duty much later from the date of removal of goods and, therefore, demand was made about payment of interest as per Section 11 AB of the Central Excise Act , 1944 to be read with Rule 7 (4) of the Central Excise Rules, 2002, but, the same was not paid as such, two show cause notices were issued. On receipt of payment of escalated price the respondent paid the duty at later stage, but, has not paid the interest for which a show cause notice no.1 dated 23.4.2004 has been given, which is as under: JUDGEMENT_139_LAWS(JHAR)7_2015.html;