2014 (9) TMI 407 - HC - Central Excise

Interest leviable on differential duty paid - Whether the provisions for interest on delayed payment contained in Section 11AB are applicable only for duty determined under sub-section (2) of the Section 11A or also for duty which has been paid under Section 11A of the Central Excise Act, 1944 - held that - assessee was able to demand from its customers the balance of the higher prices by virtue of retrospective revision of the prices. It, therefore, follows 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 demand 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 under sub-section (2B) of Section 11A and attracted levy of interest under Section 11AB of the Act - as held by the Apex Court in the case of SKF India Limited (2009 (7) TMI 6 - SUPREME COURT). Decided in favour of Revenue.

Summary

Issues:
1. Applicability of interest on delayed payment under Section 11AB of the Central Excise Act, 1944.
2. Interpretation of the impugned order in light of previous Supreme Court decisions.
3. Liability to pay interest on subsequent refixation of prices through supplementary invoices.

Analysis:

1. The appellant challenged the Customs, Excise & Service Tax Appellate Tribunal's order regarding the applicability of interest on delayed payment under Section 11AB of the Central Excise Act, 1944. The dispute involved differential duty paid on supplementary invoices issued after a price revision. The Tribunal dismissed the appeal, leading to the appellant raising questions of law regarding the application of Section 11AB to duty paid under Section 11A. The High Court analyzed similar cases and held that interest under Section 11AB was applicable to the differential duty paid later, emphasizing the importance of paying interest even for unintentional short payment of duty.

2. The High Court referred to previous Supreme Court judgments, particularly the case of SKF India Limited, to support its decision. The court highlighted the importance of paying interest under Section 11AB in cases of retrospective price revisions leading to differential duty payments. The court rejected the argument of a revenue-neutral scenario and emphasized the loss to revenue, making Section 11AB applicable. The judgment clarified that interest liability under Section 11AB was upheld, aligning with the Supreme Court's interpretation in previous cases like CCE v. International Auto Limited.

3. The issue of liability to pay interest on subsequent refixation of prices through supplementary invoices was addressed by comparing the facts of the case with established legal principles. The High Court emphasized that the differential price received after goods clearance necessitated the payment of interest under Section 11AB. The court held that the appellant was liable to pay interest as per the provisions of the Act, setting aside the Tribunal's order and restoring the decision of the Adjudicating Authority. The judgment reiterated the importance of complying with Section 11AB in cases of delayed duty payments due to price revisions.

In conclusion, the High Court's judgment clarified the applicability of interest on delayed payment under Section 11AB, emphasizing the need to pay interest even in cases of unintentional short payment of duty. The decision aligned with previous Supreme Court interpretations and upheld the liability to pay interest on differential duty paid after price revisions, highlighting the importance of revenue protection under the Central Excise Act, 1944.