2017 (2) TMI 380 - AT - Central Excise

Demand of interest - section 11A of the Central Excise Act, 1944 - duty demand is confirmed, whether the charging of interest is justified? - Held that - when the duty is determined under Section 11A(2), the interest will be invariably chargeable. As per, impugned order the duty was undisputedly determination under Section 11A, hence the demand of interest is absolutely in accordance with law, which does not require any interference - appeal dismissed - decided against appellant.

Summary

Issues Involved:
- Valuation of job-work goods under Central Excise Valuation Rules, 2000
- Challenge against demand of interest under Section 11A of the Central Excise Act, 1944

Valuation of Job-Work Goods:
The case involved the appellant engaged in manufacturing products on a job-work basis for M/s E-Merck. The appellant cleared the products to another job worker of M/s E-Merck for further processing. The dispute arose regarding the valuation of these goods, with the Department proposing that the price at which the goods were subsequently sold by E-Merck should be considered the assessable value. The appellant contended that they correctly valued the goods as per Rule 8 of Central Excise Valuation Rules, 2000. The appellant argued that since the goods were manufactured on a job-work basis and supplied to another job-worker, the price of M/s E-Merck should not be applied. The Tribunal noted that the duty demand was confirmed and paid by the appellant, and as there was no challenge to the duty demand in the appeal, it attained finality. Consequently, the Tribunal upheld the valuation based on the subsequent sale price by E-Merck.

Challenge Against Demand of Interest:
The appellant challenged the demand of interest made under Section 11A of the Central Excise Act, 1944. The appellant's counsel argued that since the duty was not payable due to the correct valuation of the goods, the demand for interest was also not sustainable. However, the Tribunal held that once the duty demand is confirmed and not challenged, interest is chargeable on such duty under Section 11AA of the Act. The Tribunal emphasized that interest is a consequence of the duty, and as the duty demand had attained finality, interest would be charged unavoidably. Referring to Section 11AA, the Tribunal concluded that when duty is determined under Section 11A(2), interest becomes chargeable. Therefore, the Tribunal dismissed the appeal, upholding the demand for interest as legal and correct.

In conclusion, the Tribunal affirmed the valuation of job-work goods based on subsequent sale price and upheld the demand for interest under Section 11A of the Central Excise Act, 1944, emphasizing the legal obligation to pay interest on confirmed duty demands.