2015 (10) TMI 1968 - AT - Central Excise

Recovery of interest - whether interest is recoverable with reference to the date of clearance of goods in cases where as a result of price escalation clause the prices are revised upward subsequent to the date of clearance of the respective goods - held that - merely because the differential amount of duty is ascertained subsequent to the date of clearance, the due date of payment of duty never stands changed or extended and it would always relate to the date of removal of goods. Further, the Hon ble Court held that the expression FOR under Rule 7(4) of Central Excise Rules, 2002 refers to the month for which the amount is determined pursuant to the finalisation of price and hence interest liability would commence from the month succeeding the day on which the duty was due and payable in relation to the goods cleared. The Hon ble Supreme Court in that case followed its earlier decision in the case of SKF India Limited - 2009 (7) TMI 6 - SUPREME COURT . As regards the judgment of Karnataka High Court in the case of BHEL (2010 (4) TMI 439 - KARNATAKA HIGH COURT ), it is to state that Hon ble Bombay High Court in case of Gammon India Limited v. Commissioner of Customs & Excise, Nagpur - 2013 (6) TMI 559 - BOMBAY HIGH COURT has held that dismissal of SLP against the said Karnataka High Court judgment in case of BHEL (supra) was not sufficient to ignore the binding Supreme Court judgment in the case of SKF India Limited (supra) endorsed again by the Supreme Court in the case of International Auto Limited (2010 (1) TMI 151 - SUPREME COURT OF INDIA). While following the judgment of the Hon ble Supreme Court in the case of SKF India Limited and International Auto Limited (supra) Bombay High Court clearly held that the judgment of Karnataka High Court does not reflect the good law in this regard as the SLP against that order was not dismissed by Supreme Court on merit. - Decided against assessee.

Summary

Issues:
- Appeal against Order-in-Appeal upholding demand of interest and setting aside penalty.
- Interpretation of interest recovery with reference to the date of goods clearance.
- Applicability of interest when differential duty is paid after final prices are known.
- Comparison of judgments by different High Courts and Supreme Court.

Analysis:
The appeal was filed challenging the Order-in-Appeal that confirmed the interest demand but set aside the penalty imposed. The main issue revolved around the recoverability of interest concerning the date of goods clearance, especially in cases where prices are revised upward post-clearance due to a price escalation clause. The appellant contended that interest should only be levied if the differential duty is not paid when invoices for the differential amount are raised. The Tribunal referred to the judgment of the Hon'ble Supreme Court in CCE v. International Auto Limited, emphasizing that the due date of duty payment remains unchanged and relates to the goods' removal date, even if the differential duty is determined later. The Court clarified that interest liability commences from the month following the duty's due and payable date. Additionally, the Tribunal highlighted the Supreme Court's decisions in SKF India Limited and International Auto Limited, disregarding the judgment of the Karnataka High Court in the case of BHEL due to the dismissal of SLP against it, emphasizing the binding nature of the Supreme Court judgments.

The Tribunal, after considering the submissions and relevant legal precedents, found no merit in the appeal. It dismissed the appeal, stating that the issue was no longer res integra in light of the Supreme Court's judgments, particularly emphasizing the importance of the due date of duty payment in relation to goods clearance. The Tribunal's decision was based on the clear legal principles established by the Supreme Court, which held significance over conflicting judgments from different High Courts. The appeal was thus rejected, and the stay application was disposed of accordingly.

In conclusion, the Tribunal's decision was based on the interpretation of interest recovery concerning the date of goods clearance, aligning with the Supreme Court's rulings on the due date of duty payment and interest liability. The Tribunal emphasized the precedence of Supreme Court judgments over conflicting High Court decisions, ultimately leading to the dismissal of the appeal.