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2015 (6) TMI 300 - HC - Central ExciseLevy of interest on deferential duty - price increase retrospectively - Whether in the facts and circumstances of the case, the appellant is liable to pay interest under Section 11AB of the Act, on raising of supplementary invoice - Held that - Assessee has cleared goods and paid duty thereon and raised supplementary invoices, but however failed to pay interest payable under Section 11AB of the Act. In view of the decision of the Supreme Court in SKF India Ltd. case, referred supra, the first plea raised by the learned counsel for the appellant fails and in that regard, we find no infirmity in the order passed by the Tribunal. Section 11AA of the Act, as amended by Section 64 of the Finance Act, 2011 (8 of 2011), does not in any way advance the case of the appellant, as we find that the liability to pay interest on delayed payment of duty is clearly envisaged in Section 11A(2B) read with Explanation 2 to the said provision. Such interest was leviable even during the period in question. In fact, the Supreme Court in SKF India Ltd. case, referred 2009 (7) TMI 6 - SUPREME COURT , observed that there is some ambiguity in the said provisions, which was a cause for amendment brought to Section 11AA of the Act. - Decision in assessee s own previous case followed 2014 (10) TMI 482 - MADRAS HIGH COURT - Decided against assessee.
Issues Involved:
1. Liability to pay interest under Section 11AB of the Central Excise Act, 1944 on raising supplementary invoices. 2. Ignoring the decision of the Karnataka High Court in the Bharat Heavy Electricals Ltd. case. Detailed Analysis: 1. Liability to Pay Interest Under Section 11AB of the Act on Raising Supplementary Invoices: The primary issue was whether the appellant was liable to pay interest under Section 11AB of the Central Excise Act on the differential duty paid through supplementary invoices. The appellant argued that interest under Section 11AB would apply only when there is a demand by the department due to short payment and not when the duty is paid voluntarily upon receiving additional consideration later. The appellant relied on the Karnataka High Court decision in Bharat Heavy Electricals Ltd. and tried to distinguish the Supreme Court decision in SKF India Ltd. The court referred to Sections 11A(1), 11A(2B), and 11AB of the Act. It emphasized the Supreme Court's interpretation in SKF India Ltd. which categorizes non-payment or short payment of duty into intentional and non-intentional defaults. The court noted that Section 11A(2B) allows assessees to pay the unpaid duty voluntarily before the issuance of a demand notice, but such payment is not exempt from interest under Section 11AB. The Supreme Court in SKF India Ltd. clarified that interest is levied for the loss of revenue on any count, and the payment of differential duty through supplementary invoices falls under Section 11A(2B). The court concluded that the appellant's argument that interest is not payable unless there is a demand notice has no merit, as the Supreme Court explicitly held that interest is chargeable on delayed payment of duty regardless of the reason for the delay. Therefore, the appellant's liability to pay interest under Section 11AB was affirmed. 2. Ignoring the Decision of the Karnataka High Court in Bharat Heavy Electricals Ltd. Case: The appellant contended that the Tribunal erred by ignoring the Karnataka High Court's decision in Bharat Heavy Electricals Ltd., especially since the Supreme Court dismissed the departmental appeal against this decision. The court observed that the decision in Bharat Heavy Electricals Ltd. was not consistent with the Supreme Court's ruling in SKF India Ltd., which clearly stated that differential duty paid through supplementary invoices is subject to interest under Section 11AB. The court also noted another Karnataka High Court decision in Presscom Products, which declared the Bharat Heavy Electricals Ltd. judgment as per incuriam for not considering the explanation to sub-section (2B) of Section 11A. The court further stated that the dismissal of the Special Leave to Appeal by the Supreme Court against the Bharat Heavy Electricals Ltd. decision does not imply endorsement of its reasoning. Given the Supreme Court's clear stance in SKF India Ltd., the court found no reason to deviate from this precedent. Conclusion: The court dismissed the appeals, holding that the appellant is liable to pay interest under Section 11AB on the differential duty paid through supplementary invoices. It also upheld the Tribunal's decision to ignore the Karnataka High Court's ruling in Bharat Heavy Electricals Ltd., reaffirming the applicability of the Supreme Court's interpretation in SKF India Ltd. Consequently, the substantial questions of law were answered against the assessee, and the appeals were dismissed with no costs.
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