2010 (10) TMI 997 - AT - Central Excise

Summary

Issues involved: Whether the appellants are liable to pay interest u/s 11AB of the Central Excise Act on the differential amounts of duty paid under supplementary invoices subsequent to clearance of goods.

Summary:
1. The appellants cleared final products on payment of duty based on initially agreed price, later revised leading to issuance of supplementary invoices for recovering differential price and duty. Department issued show-cause notice for interest u/s 11AB. Assessee contended that differential duty paid post-clearance cannot be considered non-levied or short-paid. Commissioner confirmed demand of duty and interest u/s 11AB.

2. Appellants argued Karnataka High Court's judgment favored them, distinguishing Supreme Court's decision in SKF India Ltd. case. Submitted propositions on transaction value principles. Referred to High Court decisions supporting their stance.

3. SDR contended that differential price collected was part of transaction value, and duty was self-determined and voluntarily paid, attracting interest u/s 11AB. Cited Supreme Court's decisions in SKF India Ltd. and International Auto Ltd. to support the department's position.

4. Tribunal noted that SKF India Ltd. case established that payment of differential duty under supplementary invoices attracts interest u/s 11AB. Rejected appellants' arguments on transaction value principles based on apex court rulings.

5. Tribunal emphasized that differential price collected is part of transaction value as per Central Excise Act. Reiterated apex court's stance in SKF India Ltd. and International Auto Ltd. cases, clarifying the applicability of transaction value concept.

6. Karnataka High Court's decision in BHEL case was deemed distinguishable as it did not consider transaction value definition or apex court's rulings. Tribunal upheld Supreme Court's decision in SKF case and International Auto Ltd. case, affirming levy of interest u/s 11AB.

7. Tribunal held that payment of differential duty by appellants falls under sub-section (2B) of Section 11A, justifying interest levy u/s 11AB. Upheld impugned orders demanding interest on differential duty payments.

8. All appeals were dismissed, sustaining the demand for interest under Section 11AB on the differential duty amounts paid by the appellants.