2011 (10) TMI 70 - AT - Central Excise

Supplementary invoice - Levy of interest on additional duty (Differential duty) - Held that - hon ble apex court in the case of Commissioner of Customs vs. SKF India Ltd. (2009 -TMI - 34092 - SUPREME COURT) had held that interest is leviable in case there is a delay in payment of duty and differential amounts are collected by raising supplementary invoices on account of price escalation. This position was further re-confirmed by the hon ble apex court in the case of CCE vs. International Auto Ltd. - 2010 (1)TMI -151 - SUPREME COURT OF INDIA) - Decided in favor of revenue.

Summary

Issues:
Challenge against levy of interest under Section 11AB of the Central Excise Act.

Analysis:
The appeal was directed against an order-in-original passed by the Commissioner of Central Excise, Pune, concerning the payment of interest on differential duty by the appellant. The appellant, a manufacturer of goods, had raised supplementary invoices for price escalation received from customers, paying the differential duty but not the interest. The Commissioner proposed to appropriate the duty amount and demanded interest and penalties. The impugned order confirmed the duty amount and interest but refrained from imposing penalties. The appellant challenged the interest levy only. The appellant failed to appear multiple times, requesting a Division Bench hearing, which was denied due to the low interest amount. The Revenue cited legal precedents supporting interest levies on delayed duty payments due to price differentials, arguing the applicability of the hon'ble apex court judgments in similar cases.

The legal representative for the Revenue referenced the apex court's rulings in Commissioner of Customs vs. SKF India Ltd. and CCE vs. International Auto Ltd., emphasizing the imposition of interest for loss of revenue due to price differentials. The court highlighted the changes in the recovery scheme post-amendments in the Central Excise Act, indicating the applicability of interest charges under Section 11AB. The court dismissed the appeal, stating the facts aligned with the apex court's judgment in a similar case, finding no fault in the Commissioner's order. The judgment concluded by pronouncing the dismissal of the appeal as lacking merit.

This detailed analysis of the legal judgment from the Appellate Tribunal CESTAT, Mumbai, underscores the issues surrounding the levy of interest under Section 11AB of the Central Excise Act, providing a comprehensive overview of the case's background, arguments presented, legal precedents cited, and the final decision reached by the court.