2015 (12) TMI 1049 - AT - Central Excise

Levy of interest u/s 11AA - Demand of differential duty - value addition of charity amount in the assessable value - Held that - Supreme Court decision is squarely applicable to the present case as the differential duty was determined under section 11A(2) of Central Excise Act and the notice was issued by the proper officer for demanding differential duty and subsequently confirmed and the same was ultimately paid by the appellant. Therefore, by virtue of the Apex Court decision in the case of CCE Vs. SKF India (2009 (7) TMI 6 - SUPREME COURT ). The interest is payable from the first day of the month succeeding the month in which duty ought to have been paid. - order-in-original re-determining the duty and the interest was done after 8.4.2011 when the amended section 11AA came into effect and the adjudicating authority rightly confirmed the interest from the first day of the month following the month where the duty become due. Appellants are liable to pay interest from the first day of the month following the month where the duty has become due. Therefore, we do not find any infirmity in the orders passed by both the authorities below confirming the interest under the provisions of amended section 11AA. - Decided against Assessee.

Summary

Issues Involved:
1. Levy of interest under section 11AA of the Central Excise Act.
2. Applicability of amended section 11AA for demanding interest.
3. Determination of interest liability period.

Detailed Analysis:

1. Levy of Interest under Section 11AA of the Central Excise Act:
The appellants, engaged in manufacturing fireworks, contested the levy of interest on differential duty determined due to inclusion of charity amounts in the assessable value. The Tribunal initially upheld the department's demand, including interest, but the appellants challenged this, leading to a remand by the High Court for fresh consideration on the interest liability.

2. Applicability of Amended Section 11AA for Demanding Interest:
The appellants argued that the amended section 11AA, effective from 8.4.2011, should not apply retrospectively to periods from 2000 to 2010. They contended that interest should be payable only after three months of duty determination under the pre-amended section 11AA, which did not cover willful evasion, fraud, or collusion cases. The department, however, maintained that the amended section 11AA, merging sections 11AA and 11AB, was applicable for charging interest from the date the duty was due.

3. Determination of Interest Liability Period:
The Tribunal examined the issue of interest liability for the period from July 2000 to July 2010. The adjudicating authority had re-determined the duty and demanded interest under the amended section 11AA. The Tribunal referenced the Larger Bench decision in Alembic Ltd. Vs. CCE, Vadodara, which held that interest liability under section 11AB applied even before 11.5.2001, and the Supreme Court decision in CCE, Pune Vs. SKF India Ltd., which clarified that interest is leviable on delayed duty payment for any reason, from the first day of the succeeding month after the duty became due.

Conclusion:
The Tribunal upheld the interest demand from the first day of the month following the month when the duty became due, as per the amended section 11AA. The appeals were dismissed, affirming the orders of the authorities below. The decision was based on the Supreme Court's ruling that interest is payable from the month following the due date of duty payment, irrespective of the reasons for delay.