2007 (4) TMI 469 - AT - Central Excise

Summary

Issues involved: Assessment of interest u/s 11AB of the Central Excise Act, 1944 on additional duty amount voluntarily paid by the appellants.

Summary:

Assessment of Interest u/s 11AB:
The appellants manufactured Axles and other parts of motor vehicles supplied to M/s. Tata Motors during April 2003 to August 2003. Due to a rise in steel prices, they escalated the prices and received an additional amount of Rs. 2,05,71,905.00 from M/s. Tata Motors on 31-8-2003, paying extra duty on the same day. The issue arose when the appellants were issued a demand for interest amounting to Rs. 4,41,515.00 u/s 11AB. The Lower Appellate Authority held that interest was payable as the appellants voluntarily paid the additional duty amount u/s 11A(2B) of the Act.

Arguments and Decision:
The Department supported the demand for interest, but the Tribunal found that the assessments were not finalized before the additional payment was made. The Tribunal noted that the differential duty amount was paid voluntarily on the same day as the price escalation, without any demand notice or allegation of short-levy. The Tribunal concluded that this case did not fall under the category of short-levy or non-levy covered by u/s 11A and 11AB. Assessments involving price escalation were deemed provisional, and the payment made by the appellants was akin to finalization of the provisional assessment. Therefore, the Tribunal held that no interest was payable on the voluntarily paid differential duty amount, as it was not a case of non-levy or short-levy. Consequently, the impugned order was set aside, and the appeal was allowed.