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2022 (12) TMI 1107 - AT - Central ExciseInterest on differential duty- captive consumption - revenue neutrality - revised CAS-4 prepared by the cost accountant - grievance of the appellant stems from the claim that the provision for charging interest under section 11AB of Central Excise Act, 1944 is triggered only when suppression, fraud or misrepresentation has caused evasion of duty - HELD THAT - It is clear that the decision in COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS M/S SKF INDIA LTD. 2009 (7) TMI 6 - SUPREME COURT has firmly established the principle that arising from the liability for duties of central excise devolving on the assessee at the price existing at the time of clearance, notwithstanding subsequent receipt of differential, interest under section 11AB of Central Excise Act, 1944 would have to be discharged for termination of proceedings under section 11A of Central Excise Act, 1944 - On the other hand, in COMMR. OF C. EX., BANGALORE-III VERSUS BHARAT HEAVY ELECTRICALS LTD. 2010 (4) TMI 439 - KARNATAKA HIGH COURT , the principle established was that section 11AB of Central Excise Act, 1944 could not be invoked independently of section 11A of Central Excise Act, 1944 rendered superfluous owing to prompt discharge of tax liability on escalation of price. In the impugned proceedings, with confirmation of duty liability under section 11A of Central Excise Act, 1944, the claim of factual matrix identical with that in re Bharat Heavy Electricals Ltd does not find favour. Therefore, the liability to pay interest on duties short-paid at the time of clearance of goods for captive consumption does not get erased. The interest liability had not been discharged at the time of payment of differential duty and, hence, the essential precondition for dropping of further proceedings had not been complied with. Inevitably, the confirmation of differential duty necessarily has interest liability appended to it. Appeal dismissed.
Issues:
Challenge to order confirming recovery under section 11A of Central Excise Act, 1944; Applicability of interest under section 11AB of Central Excise Act, 1944. Analysis: 1. The dispute in this case revolves around the challenge by M/s HH Patel & Company against the order confirming recovery under section 11A of Central Excise Act, 1944. The appellant, engaged in manufacturing 'loose zarda', had been clearing goods to branches after paying central excise duties. However, the jurisdictional authority found discrepancies in the duty computation, leading to short-payment of duty. 2. The appellant argued that interest under section 11AB of the Central Excise Act, 1944 should not apply as there was no suppression, fraud, or misrepresentation causing duty evasion. Citing precedents like Commissioner of Central Excise, Pune v. Coca-Cola India Pvt Ltd, the appellant contended for 'revenue neutrality' and immunity from interest liability. However, the impugned order upheld the interest liability due to the duty underpayment. 3. The appellant relied on judgments such as Commissioner of Central Excise, Bangalore-III v. Bharat Heavy Electricals Ltd to support their stance. The contention was that interest under section 11AB is linked to non-payment or short payment of duty, which did not apply in their case due to the prompt discharge of tax liability on price escalation. 4. The Authorized Representative argued that interest liability is a crucial condition for not proceeding with a demand under section 11A, as established by the Supreme Court in the SKF India Ltd case. The contention was that interest under section 11AB must be discharged for the termination of proceedings under section 11A. 5. The High Court's decision in Bharat Heavy Electricals Ltd and the Supreme Court's ruling in SKF India Ltd were pivotal in determining the applicability of interest under section 11AB. The former emphasized prompt tax liability discharge, while the latter highlighted the obligation to pay interest for delayed or deferred duty payment. 6. Ultimately, the Tribunal found that the appellant's case did not align with the circumstances in Bharat Heavy Electricals Ltd, where interest liability was not erased due to short-paid duties. The confirmation of differential duty necessitated interest payment, which had not been fulfilled at the time of differential duty payment, leading to the dismissal of the appeal. 7. The judgment reaffirmed that interest under section 11AB is essential for terminating proceedings under section 11A, and the liability to pay interest on short-paid duties remains even if the duty liability is confirmed. Therefore, the appeal was dismissed, upholding the original authority's order. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the applicability of interest under section 11AB of the Central Excise Act, 1944.
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