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2023 (7) TMI 713 - AT - Central ExciseInterest payable on differential duty - short payment of duty - inter-unit transfers - recipient units captively consumed the goods in further manufacture of their finished dutiable goods - revenue neutrality - HELD THAT - Admittedly the Appellant has correctly assessed the value on which duty was paid as the goods were transferred to their sister unit under same management. The said payment of duty is also in accordance with Circular No. 692/8/2003-CX dated 13.02.2003 read with Trade Notice No. 171/2003 dated 26.08.2003 issued by the Hyderabad Commissionerate. Thus the Appellant has paid the correct duty as per the scheme of the Act read with the Rules - further no case of short payment of duty is made out. It is only when the Appellant obtained fresh cost certificate for the next six months period and found that there is some escalation in the cost has suo moto deposited the differential duty though they were not under obligation to pay any additional amount. Further under the facts and circumstances whatever duty the Appellant would have paid was available to their sister unit as Cenvat credit. Thus the situation is wholly revenue neutral. Impugned order set aside - appeal allowed.
Issues involved:
The judgment involves the issue of whether interest is payable on the differential duty in a case where the duty was paid correctly as per the prescribed method, and there was no short payment of duty. The Appellant, a manufacturer of bulk drugs, cleared goods to its other units during the disputed period, and the recipient units captively consumed the goods in further manufacture of their finished dutiable goods. Details of the judgment: 1. The Appellant discharged duty at the time of clearance based on the cost certificate available on that date. After the first 6 months of the year, they obtained a cost certificate based on the cost of the immediate past current period and paid the applicable differential duty immediately on receipt of the new cost certificate. 2. The dispute revolved around the question of whether interest is payable on the differential duty. The Appellant contested the demand of interest on the grounds that there was no short payment of duty at any point, and the transaction being revenue neutral, interest liability did not arise. 3. The Adjudicating Authority and Appellate Commissioner held that interest is payable, relying on various decisions including CCE vs SKF India and other similar cases. 4. The Appellants argued that interest becomes payable only for short payment or non-payment of duty as per Sec 11AB of the CE Act, and since there was no short payment on the due date, interest liability does not arise. 5. The Appellants further contended that the clearances being inter-unit transfers and the recipient unit availing Cenvat credit, the transaction was revenue neutral, and therefore, interest being compensatory in nature for revenue loss suffered, the issue of interest liability did not arise. 6. The Tribunal, after considering the contentions of both parties, found that the Appellant had correctly assessed the value on which duty was paid as per the prescribed method. The payment of duty was in accordance with Circulars and Trade Notices issued by the Hyderabad Commissionerate, and there was no case of short payment of duty. The situation was deemed revenue neutral, and therefore, the Tribunal allowed the appeal and set aside the Impugned Order. 7. The Tribunal pronounced the judgment in the Open Court on 17.07.2023. This summary provides a detailed overview of the judgment, focusing on the issue of interest liability on differential duty payments and the arguments presented by both parties in the case.
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