2012 (7) TMI 570 - AT - Central Excise

Demand of interest on the amount of differential duty - enhancement of price as per the price variation clause of the relevant contract - differential duty was paid - demand of interest on the amount of differential duty Held that - Payment of differential duty was under sub-section 2(B) of Section 11A of the Central Excise Act and, therefore, interest was leviable thereon under Section 11AB of the Act Against assessee

Summary

Issues:
- Liability of interest under Section 11AB of the Central Excise Act on the amount of the differential duty paid by the manufacturer.
- Applicability of case law in determining the liability of interest on the amount of differential duty.

Analysis:

The judgment by the Appellate Tribunal CESTAT, Bangalore revolves around the issue of interest liability under Section 11AB of the Central Excise Act on the amount of the differential duty paid by the manufacturer. The appellant had initially cleared excisable products based on the original agreed price with buyers, but later, the buyers agreed to an enhancement of price as per the contract's price variation clause. Consequently, the appellant issued supplementary invoices for recovering the differential price and duty from the buyers. The department issued a show-cause notice seeking recovery of interest under Section 11AB of the Act on the amount of differential duty from the date of goods clearance to the date of payment. Penalties under Section 11AC of the Act and Rule 25 of Central Excise Rules, 2002 were also proposed. The Additional Commissioner appropriated the differential duty amount under Section 11A, demanded interest, and imposed a penalty. The Commissioner (Appeals) upheld the view on the substantive issue but vacated the penalty, leading to the present appeal against the interest demand.

The learned Deputy Commissioner argued that the issue of interest liability under Section 11AB had been settled in favor of the Revenue by the Supreme Court in previous cases such as Commissioner vs. SKF India Ltd. and CCE vs. International Auto Ltd. The Supreme Court, in a similar context, had held that interest was leviable on the differential duty under Section 11AB of the Act. The Tribunal noted that the payment of differential duty fell under sub-section 2(B) of Section 11A, making interest leviable under Section 11AB. As a result, the appeal was dismissed based on the precedent set by the Supreme Court.

In conclusion, the judgment reaffirms the liability of interest under Section 11AB of the Central Excise Act on the amount of differential duty paid by the manufacturer, as established by previous case law and the interpretation of relevant statutory provisions. The decision underscores the importance of complying with excise duty regulations and the consequences of failing to pay interest on differential duty amounts.