2019 (4) TMI 171 - AT - Central Excise

Interest on differential duty under sub-section (2B) of Section 11A of Central Excise Act, 1944 - appellant paid the differential duty which arose due to enhancement of prices of motor vehicle parts cleared earlier and issued supplementary invoices of such differential duty - Held that - It has been brought to the notice of the Bench that in similar circumstances this Tribunal has remanded the matter to the adjudicating authority to decide the issue on the basis of the outcome of the reference pending before the Larger Bench of Hon ble Supreme Court - In such scenario, at this stage, it is prudent to remand the matter to the Adjudicating Authority to decide the issue of liability of interest on the differential duty paid subsequent to the revision of prices, on the basis of the outcome of the pending reference before the Larger Bench of Hon ble Supreme Court. Appeal allowed by way of remand.

Summary

Issues:
Appeals against Order-in-Originals passed by Commissioners of Central Excise regarding payment of interest on differential duty; Applicability of Section 11A(2B) of Central Excise Act, 1944; Doubt over the judgment in SKF India Ltd case; Reference to Larger Bench by Supreme Court; Remand to Adjudicating Authority.

Analysis:
The appeals were filed against the Order-in-Originals passed by the Commissioners of Central Excise regarding the payment of interest on the differential duty paid by the Appellants. The Appellants, engaged in the manufacture of motor vehicle parts, supplied these parts to OE manufacturers at declared prices, later revising the prices and issuing supplementary invoices. The issue revolved around the failure to discharge appropriate interest on the differential duty paid, leading to Show Cause Notices being issued. The Appellants argued that the matter was referred to the Larger Bench of the Supreme Court, expressing doubt over the judgment in the SKF India Ltd case.

The Revenue contended that interest was payable on the differential duty paid, citing the Hon'ble Delhi High Court's decision in Hindustan Insecticides Ltd case. The Revenue argued that interest was attracted under Section 11A(2B) of the Central Excise Act, 1944, as all notices were issued within the normal period of limitation. The Appellants had not resorted to provisional assessment under Rule 7 of the Central Excise Rules, 2002, and had failed to discharge appropriate interest on the differential duty paid post-revision of prices.

The Tribunal considered the submissions and records, noting that the Appellants had paid the differential duty arising from price enhancements and issued supplementary invoices. The Commissioner relied on the SKF India Ltd case, emphasizing the requirement to discharge interest for the delayed period. The Tribunal discussed the provisions of Section 11A, distinguishing cases of non-levy or short levy of duty due to oversight from those involving intentional non-payment. The Tribunal highlighted the applicability of sub-section (2B) of Section 11A to the payment of differential duty through supplementary invoices.

The Appellants argued that the SKF India Ltd case's ratio was doubted by a subsequent Division Bench of the Supreme Court in the Steel Authority of India Ltd case. The matter was referred to the Larger Bench for reconsideration. In light of this, the Tribunal decided to remand the matter to the Adjudicating Authority to determine the liability of interest on the differential duty paid post-revision of prices based on the outcome of the pending reference before the Larger Bench of the Supreme Court. Consequently, the appeals were allowed by way of remand to the Adjudicating Authority.