2008 (7) TMI 650 - AT - Central Excise

Summary

Issues Involved:
1. Liability to pay interest under Section 11AB for short payment of duty.
2. Applicability of interest payment when duty was paid immediately upon discovery of short payment.
3. Interpretation of Section 11AB in the context of short payment of duty.

Analysis:

Issue 1: Liability to pay interest under Section 11AB for short payment of duty
The case involved a situation where the respondent had initially discharged duty liability on UPS products by deducting Central Sales Tax (CST) from the price. Upon realizing that CST was not applicable, they paid the correct duty amount but were charged interest by the Deputy Commissioner. The Commissioner (Appeals) vacated the interest demand, citing a Tribunal decision. The Revenue appealed, arguing that interest under Section 11AB is payable from the month following when duty should have been paid.

Issue 2: Applicability of interest payment when duty was paid immediately upon discovery of short payment
The respondent contended that they should not be liable for interest as they paid the differential duty promptly upon realizing the error, referencing a High Court judgment. The High Court ruling highlighted that interest under Section 11AB applies when duty is short paid, but not when duty is paid promptly upon discovering the liability. The assessee in this case rectified the underpayment upon becoming aware of the correct duty amount.

Issue 3: Interpretation of Section 11AB in the context of short payment of duty
The Tribunal analyzed Section 11AB, which mandates interest payment when duty is short levied or paid. The Tribunal noted that the provision requires interest payment when duty is partially paid late. In this case, the duty was underpaid due to incorrect computation, leading to the application of Section 11AB. The Tribunal distinguished this case from others involving price revisions, emphasizing that the interest was correctly demanded as per statutory provisions.

In conclusion, the Tribunal set aside the Commissioner (Appeals) decision, ruling in favor of the Revenue. The judgment underscored the importance of complying with Section 11AB regarding interest payment for short payment of duty, even when the underpayment is rectified upon discovery. The decision highlighted the statutory requirement for interest payment in cases of incorrect duty computation, affirming the original authority's order based on Section 11AB provisions.