2013 (7) TMI 469 - AT - Central Excise

Interest u/s 11DD - Differential duty paid on account of revision of price of petroleum products - Appellant i.e. IOC (Rewari) during the period in dispute had received duty paid petroleum products from IOC (Bijwasan) the differential duty paid was amount realised by the appellant (IOC Rewari) from customers towards duty which was in excess of the duty originally paid by the IOC (Bijwasan) - The payment of this differential amount to be treated under Section 11D - The question of charging of interest for the period of delay in paying the same to Government would be governed by Section 11DD only which came into effect from 14.05.2003 - Interest would be demandable only for the period from 14.05.2003 under Section 11DD and for the period prior to 14.05.2003 the interest would not be chargeable. Limitation Held that - As held by coordinate Bench of the Tribunal in the case of Hindustan Insecticides 2012 (286) E.L.T. 208 (Tri. - Del.) the interest being by automatic operation of law, the limitation period prescribed would not be applicable .

Summary

Issues:
Recovery of interest under Section 11AB on differential duty paid due to upward revision of prices, applicability of Section 11DD for interest payment, verification of factual claims by appellant, question of limitation for interest recovery.

Analysis:
The appeal involved a dispute where the appellant, a bonded warehouse, received duty paid petroleum products from a terminal and later sold them at revised prices, resulting in excess duty collection from customers. The appellant paid the differential duty to the government under Section 11D. The Department sought interest under Section 11AB, citing retrospective price revision. The Additional Commissioner and Commissioner (Appeals) upheld the interest demand based on the SKF India judgment. The appellant contended that interest was not applicable as the duty was paid under Section 11D, pre-14.05.2003, and the demand was time-barred. The Tribunal noted discrepancies in the factual understanding of duty payment and remanded the matter for verification.

The Tribunal observed that the differential duty paid by the appellant was collected from customers in excess of the duty originally paid by the terminal. The appellant claimed that interest should be governed by Section 11DD post-14.05.2003, not under Section 11AB. The Tribunal agreed that if the appellant's claims were accurate, interest would be chargeable only from 14.05.2003. The factual discrepancies required verification by the adjudicating authority to determine the correct application of interest provisions.

Regarding the question of limitation for interest recovery, the Tribunal referenced a previous judgment stating that interest operates by law, exempting it from a limitation period. As interest is automatically applied, the Tribunal clarified that the usual limitation period did not restrict interest recovery. The matter was remanded to the original adjudicating authority for a fresh decision considering the correct legal provisions and factual verification.