2019 (5) TMI 1013 - AT - Central Excise

Levy of Interest - price escalation clause - whether interest is payable when the value of the goods has been increased subsequent to the clearance of the goods due to cost escalation? - HELD THAT - It has been decided by the Apex Court in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2019 (5) TMI - SUPREME COURT that interest is payable when there is a cost escalation and consequently additional duty is to be paid. Appeal dismissed - decided against appellant.

Summary

Issues:
Whether interest is payable when the value of goods has been increased due to cost escalation post-clearance.

Analysis:
The judgment delivered by the Appellate Tribunal CESTAT HYDERABAD, with Shri P. Venkata Subba Rao as the Member (Technical), pertained to the issue of interest payment on goods where the value had escalated post-clearance due to cost escalation. The Ld. Consultant for the appellant highlighted that this issue was previously pending before the Hon’ble Supreme Court and had been addressed in Civil Appeal No. 2150 of 2012, among others, in the case of Steel Authority of India Limited [2019(5)TMI – Supreme Court]. The Apex Court ruled that interest is indeed payable in scenarios involving cost escalation leading to additional duty payment. Consequently, the Tribunal found that in line with the Apex Court's judgment, the appeal filed by the appellant was rejected.

In conclusion, the Tribunal's decision was based on the precedent set by the Hon’ble Apex Court in the Steel Authority of India Limited case, affirming that interest is payable when cost escalation results in additional duty payment. The rejection of the appeal by the Tribunal was a direct consequence of applying the ratio decidendi of the Apex Court's judgment to the present case. The legal principle established by the Apex Court regarding interest payment in such circumstances was crucial in determining the outcome of the appeal before the Appellate Tribunal CESTAT HYDERABAD.