2023 (6) TMI 62 - AT - Central Excise

Levy of interest on the differential duty paid during the relevant period - issuance of supplementary invoices enhancing the value declared at the time of clearance of the goods - suppression of facts - extended period of limitation - HELD THAT - The issue has been settled by the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS M/S SKF INDIA LTD. 2009 (7) TMI 6 - SUPREME COURT , wherein it has been observed that at the time of sale the goods carried a higher value and those were cleared on short payment of duty. The differential duty was paid only later when the assessee issued supplementary invoices to its customers demanding the balance amounts. Seen thus it was clearly a case of short payment of duty though indeed completely unintended and without any element of deceit etc. The payment of differential duty thus clearly came 13 under sub-section (2B) of section 11A and attracted levy of interest under section 11AB of the Act. Extended period of limitation - HELD THAT - The appellant on payment of differential duty on the supplementary invoices due to revision in prices invariably reflected the same in their ER1 returns filed with the department from time-to-time. Thus, calling for the data by the Revenue again which already mentioned in the respective ER-1 Returns and non-furnishing of the same by the appellant in time, cannot be held as a ground to uphold the suppression of facts in the form of data from the knowledge of the department - it has been observed that on declaration of the differential duty paid by reflecting the same in the relevant monthly returns filed with the department from time-to-time, would not fall within the scope of suppression of fact and accordingly, extended period of limitation was set aside in those cases. With regard to applicability of period of limitation for recovery of interest incorporated at sub-section (15) in Section 11A of CEA, 1944 with effect from 08.4.2011, the demand of interest can be sustained only for the normal period. The impugned order is modified to the extent of confirming recovery of interest for the normal period. Since there is no suppression of fact, the imposition of penalty, in the circumstances of the case, is not warranted. Appeal allowed in part.

Summary

Issues Involved:
1. Levy of interest on differential duty paid via supplementary invoices.
2. Applicability of the extended period of limitation for the recovery of interest.
3. Imposition of penalty for non-payment of interest.

Summary:

Levy of Interest on Differential Duty:
The central issue in these appeals is the levy of interest on the differential duty paid during the relevant period by issuance of supplementary invoices enhancing the value declared at the time of clearance of the goods. The appellants argued that they are not required to pay interest on the differential duty as per the judgments of MRF Ltd. and Bharat Heavy Electricals Ltd. However, the Revenue contended that interest is automatically payable when differential duty is paid, as upheld by the Larger Bench of the Hon'ble Supreme Court in the case of Steel Authority of India Ltd. vs. Commissioner of Central Excise, Raipur.

The Tribunal found that the issue has been settled by the Hon'ble Supreme Court in SKF India Ltd., where it was observed that interest is leviable on delayed or deferred payment of duty for whatever reasons. The Tribunal concurred with the views expressed in SKF India Ltd. and Steel Authority of India Ltd., thus confirming that interest is payable on the differential duty paid via supplementary invoices.

Applicability of Extended Period of Limitation:
The appellants argued that the differential duty paid was reflected in their monthly ER-1 returns, and thus, there was no suppression of facts, making the extended period of limitation inapplicable. The Tribunal noted that the appellants had indeed reflected the differential duty in their ER-1 returns filed with the department from time to time. Therefore, non-furnishing of the same data again upon request by the Revenue cannot be held as suppression of facts.

The Tribunal referred to the judgments of Hindustan Insecticides Ltd. and Neel Metal Products Ltd., which held that declaring differential duty in monthly returns does not constitute suppression of facts. Consequently, the Tribunal held that the extended period of limitation was not applicable and the demand of interest can be sustained only for the normal period.

Imposition of Penalty:
Given that there was no suppression of facts, the Tribunal found that the imposition of a penalty was not warranted in this case. Thus, the appeal was partially allowed to the extent of confirming the recovery of interest for the normal period and setting aside the penalty.

Conclusion:
The Tribunal modified the impugned order to confirm the recovery of interest for the normal period and set aside the imposition of penalty, partially allowing the appeal.