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2023 (4) TMI 603 - AT - Central ExciseDemand of interest on differential duty - price-escalation clause - whether the Appellants are required to pay interest on the differential duty paid subsequently due to price variation clause or any reason or for that matter if the price is revised for any reason much a later date? - HELD THAT - Hon ble Apex Court has discussed the issue at length in the case of M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2019 (5) TMI 657 - SUPREME COURT . Hon ble Apex Court has upheld the principle that the duty is payable at the time of removal irrespective of the fact that it is paid subsequently. Accordingly, interest as far as Section 11AB is concerned would be reckoned from the date on which the duty is payable and not from the date of payment of such duty. Thus, nothing survives in the appeal - appeal filed by appellant dismissed.
Issues:
The issues involved in this case are the demand for central excise duty, interest under Section 11AA of the Act, and penalty based on supplementary invoices raised by the Appellants without paying the applicable duty. The main question is whether interest is required to be paid on the differential duty paid subsequently due to a price variation clause or any reason, even if the price is revised at a much later date. Central Excise Duty Demand: The Appellants, engaged in manufacturing Pre-tensioned Pre-stressed Concrete Sleepers for railway tracks, entered into an agreement with South Central Railway which allowed for price escalation. The Department found that the Appellants raised supplementary invoices without paying the central excise duty. A show cause notice was issued demanding central excise duty, interest, and penalty. The Adjudicating Authority confirmed the demand along with interest of Rs. 61,408, which is challenged in this appeal. Interest Payment Issue: The Counsel for the Appellants referred to a Larger Bench of the Supreme Court regarding the issue of interest payment where duty was paid subsequently due to price variation. The Department's representative argued that the Apex Court had already decided this issue in favor of the Revenue in 2019, and subsequent decisions by the Tribunal have followed this precedent. The Counsel for the Appellants, acknowledging the decision in favor of the Revenue, conceded that the issue has been settled in the Revenue's favor. Judgment and Precedents: The Member (Technical) examined the records and referred to the Supreme Court's decision in the case of SAIL Vs Commissioner of Central Excise, Raipur [2019 (366) ELT 769 (SC)]. The Supreme Court upheld the principle that duty is payable at the time of removal, regardless of when it is actually paid. Interest under Section 11AB is to be calculated from the date the duty is payable, not from the date of payment. The Tribunal and subsequent cases have consistently followed this principle, as evidenced by judgments such as BHEL Vs Commissioner of Customs and Central Excise, Kanpur [2023 (21) TMI 181 - SC] and others. Conclusion: Based on the above analysis and following the established legal principles and precedents, the appeal filed by the Appellant is rejected as nothing survives for consideration. The decision was pronounced in court at the conclusion of the hearing.
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