Interest on differential excise duty applies where a price escalation clause makes the sale price finally determinable only later.

Interest was held payable on differential duty arising from supplementary invoices issued under a price escalation clause because the original clearance value was not finally determinable. The later differential amount formed part of the transaction value as an amount payable in connection with the sale, even though paid later. The note also states that provisional assessment would have led to interest on finalisation under the excise rules, and that interest is still attracted where the short-paid duty arises from later ascertainment of the sale price. Relief to the assessee was therefore not available.

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Issues: Whether interest was payable on differential duty arising from supplementary invoices issued pursuant to a price escalation clause.

Analysis: The goods were cleared under contracts containing a price escalation clause, so the value adopted at the time of original clearance was not finally determinable. The differential amount payable later under the revised purchase orders formed part of the transaction value under section 4(3)(d) of the Central Excise Act, 1944 because it was an amount payable in connection with the sale, even if payable at a later time. The assessee could have sought provisional assessment, in which event interest would be payable on finalisation under the relevant excise rules. Even apart from provisional assessment, the delayed payment of the differential duty in such cases attracts interest because the short-paid amount is attributable to the later ascertainment of the sale price.

Conclusion: Interest on the differential duty was rightly upheld, and the assessee was not entitled to relief.

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