2007 (4) TMI 74 - AT - Central Excise

Interest - Alleged that appellant liable to pay interest seem to have voluntarily paid the additional duty amount under sub-section (2B) of Section 11A of the CEA,1944 - Held that allegation was not correct and appellant not liable to pay any interest

Summary

Issues:
1. Liability for interest under Section 11AB for differential duty amount voluntarily paid by the appellants during a period of price escalation.

Analysis:
The case involved the appellants, who manufactured axles and other motor vehicle parts supplied to M/s. Tata Motors during a specified period. The appellants paid additional duty amounting to Rs. 2,05,71,905.00 due to a rise in steel prices, which they received from M/s. Tata Motors on the same day. The issue revolved around the demand for interest of Rs. 4,41,515.00 under Section 11AB for the differential duty amount paid voluntarily by the appellants. The Lower Appellate Authority upheld the demand, stating it was payable as the appellants voluntarily paid the additional duty amount. The Department supported this decision.

Upon review, the Tribunal considered the submissions from both sides and analyzed the legal provisions. The Tribunal noted that the assessments were not finalized before the additional payment was made by the appellants. It was highlighted that the differential duty amount was paid voluntarily on the same day the appellants received additional amounts from their customers due to price escalation. The Tribunal concluded that this scenario did not fall under the category of short-levy or non-levy covered under Section 11A and Section 11AB. Assessments involving price escalation were deemed provisional, and payments made after final value determination were akin to finalization of provisional assessments. Therefore, the Tribunal ruled that no interest was payable by the appellants on the voluntarily paid differential duty amount, as it was not a case of non-levy or short levy.

In light of the analysis, the Tribunal set aside the impugned order and allowed the appeal, stating the appellants were not liable to pay interest on the voluntarily paid differential duty amount. The judgment emphasized the provisional nature of assessments involving price escalation and clarified the distinction between voluntary payments in such cases and cases of non-levy or short levy under the relevant legal provisions.