2009 (11) TMI 771 - AT - Central Excise

Summary

Issues involved: Appeal filed by Revenue to restore order vacated by Commissioner (Appeals) regarding demand of interest and penalty on differential duty realized under supplementary invoices.

Summary:
1. The respondent, a telecom equipment manufacturer, cleared goods to BSNL under a contract where 90% of the price was charged at clearance and 10% retained by BSNL for potential duty revisions. The original authority demanded interest and imposed penalty on the respondent for the period between clearance of goods and payment of differential duty.

2. Revenue's appeal argued that interest on differential amount realized under provisional invoices is payable from the first month after determination, even if paid before final assessment order. Commissioner (Appeals) relied on a Tribunal decision which was later overruled by a Larger Bench in a different case. Revenue sought restoration of original authority's order.

3. The Tribunal found the demand for interest on the differential amount to be lawful based on the Cadbury India case. However, the penalty imposed on the respondent was deemed unjustified as the duty was paid promptly upon realization. The recent Apex Court decision in CCE, Pune v. M/s. SKF India Ltd. clarified the extent of interest payable post-clearance. The appeal was partially allowed, restoring the original authority's order on interest demand.

*(Operative portion of the order already pronounced in open court on conclusion of the hearing)*