2017 (6) TMI 426 - AT - Central Excise

Liability of interest u/s 11 of CEA, 1944 - price variation clause - payment of duty on differential amount - Held that - the issue involved in the present case is no more res integra and has been settled by the Hon ble Supreme Court in the case of CCE, Pune vs. SKF India Ltd. 2009 (7) TMI 6 - SUPREME COURT , wherein the Supreme Court has categorically held interest is to be paid on the differential duty arising on account of the price variation - interest demand upheld - appeal dismissed - decided in favor of Revenue.

Summary

Issues:
- Appeals against rejection of appeals by Commissioner (A) and demand of interest under Section 11 of Central Excise Act, 1944 on differential duty paid.

Analysis:
The appellants, a manufacturing unit owned by the Government of Kerala, filed three appeals against the Commissioner (A)'s order rejecting their appeals and upholding the demand of interest on the differential duty paid. The appellant manufactures electric meters cleared to Kerala State Electricity Board (KSEB) based on a Memorandum of Understanding (MoU). The purchase orders from KSEB allowed for price revisions, leading to supplementary invoices for differential price and duty. The appellants paid the differential duty but not the interest on it. The Commissioner (A) upheld the demand of interest under Section 11 of the Central Excise Act, citing the Supreme Court judgment in SKF India Ltd. The appellant argued that the order lacked consideration of material, issuance of show-cause notice, and was time-barred. They contended that the price escalation was due to a government decision, paid the differential duty promptly, and there was no allegation of fraud. The appellant also disputed the application of the SKF India Ltd. judgment, claiming it did not discuss the limitation under Section 11A of the Act.

The AR argued that the issue was settled by the Supreme Court in the SKF India Ltd. case, where it was held that interest is payable on differential duty due to price variations. The Tribunal, after hearing both parties and examining the records, found the Commissioner (A)'s order aligned with the SKF India Ltd. judgment. The Tribunal upheld the order, stating that the issue was conclusively in favor of the Revenue, and dismissed all three appeals. The decision was pronounced on 07/06/2017.