2019 (8) TMI 953 - AT - Central Excise

Levy of interest on differential duty - Section 11AB of CEA - Price escalation clause - the consideration for sale of goods is received through a retrospective increase in the price of the goods - HELD THAT - The issue decided in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE RAIPUR 2019 (5) TMI 657 - SUPREME COURT where the demand of interest was upheld. The interest has to be paid on the amount of Central Excise duty discharged latter due to retrospective increase in the price of the goods - Appeal dismissed - decided against appellant.

Summary

Issues:
- Whether interest is payable under Section 11AB when the consideration for the sale of goods is received through a retrospective increase in the price of the goods.

Detailed Analysis:
The case involved an appeal against the Order-in-Appeal regarding the payment of excise duty on goods supplied by the appellants. The appellants, engaged in the manufacture of excisable goods, had an agreement with a buyer for the supply of gases. The dispute arose regarding the payment of interest under Section 11AB on excise duty paid late, specifically on the additional consideration received by the appellants after the initial sale. The department contended that interest was payable on the excise duty paid late at the end of the year.

The appellant argued that they had discharged the excise duty liability on the full value received from their customers, including the surcharge received later. The main issue in dispute was whether interest under Section 11AB was applicable when the consideration for the goods sold was received through a retrospective increase in the price of the goods. This issue was referred to a Larger Bench of the Supreme Court in a previous case involving Steel Authority of India Ltd. vs. CCE, Raipur. The Supreme Court clarified that the duty and interest should be paid based on the value of the goods at the time of removal, even if the price was subject to retrospective variation.

The appellant acknowledged that the Supreme Court's decision favored the Revenue and held that interest had to be paid on the excise duty discharged later due to a retrospective increase in the price of the goods. The Departmental Representative also agreed that the case fell under the purview of the Steel Authority of India Ltd. case. Consequently, the Tribunal upheld the impugned order, ruling that the appellant was liable to pay interest under Section 11AB. The appeal challenging the interest payment was deemed unsustainable, and the impugned order was upheld, resulting in the rejection of the appellant's appeal.