2017 (1) TMI 416 - AT - Central Excise

Interest - delay in payment of differential duty - captive consumption - valuation finalized after the year end on cost construction method - whether the said differential duty paid by the appellant is chargeable to interest under Section 11AB of Central Excise Act, 1944? - Held that - there is no need of any adjudication proceeding for recovery of interest, the statutory provisions of Section 11AB itself is a provisions for recovery of the interest. The interest is piggy back of the duty, once the duty is admitted, interest cannot be detached from the duty liability. In the present case valuation is under Rule 8 of Valuation Rules 2000, which is only applied in a case where the goods are not sold and the sale value is not available. Since no sale is involved question of issuance of supplementary invoice does not arise - the interest is correctly payable by the appellant on the delayed payment of duty - appeal dismissed - decided against assessee.

Summary

Issues involved:
1. Whether differential duty paid by the appellant is chargeable to interest under Section 11AB of Central Excise Act, 1944.

Comprehensive analysis:
The appellant was discharging excise duty on the value as per Rule 8 of the Central Excise Valuation Rules, 2000, which is based on the cost construction method. Due to the unavailability of exact costing at the time of goods clearance, valuation was done based on previous years' data, resulting in a delay in payment of differential duty. The main issue was whether the interest under Section 11AB of the Central Excise Act, 1944, is chargeable on this differential duty. The appellant argued that the show cause notice for demanding interest was time-barred and cited various judgments to support that interest was not payable on the differential duty. However, the Revenue contended that interest is payable even without the issuance of a show cause notice if there is a delay in duty payment.

The Tribunal carefully considered both sides' submissions and found that there was an admitted delay in the payment of excise duty due to the unavailability of correct cost data for assessing the value as per Rule 8. Despite the reason for the delay, the Tribunal held that interest under Section 11AB was applicable for delayed duty payment. It was emphasized that the limitation period does not apply to the payment of interest, and there is no need for adjudication proceedings as Section 11AB itself provides for interest recovery. The Tribunal rejected the argument that certain judgments granting immunity from interest payment could be applied in this case, stating that it is bound by the provisions of the Customs and Central Excise Act. Additionally, the Tribunal distinguished the case under reference to the Larger Bench of the Supreme Court, highlighting that the facts were different as it involved the sale of goods and supplementary invoices, which were not applicable in the present case under Rule 8 valuation where goods were not sold. Ultimately, the Tribunal upheld the impugned order, dismissing the appeal and affirming that interest was correctly payable by the appellant for the delayed duty payment.