Supreme Court: Interest leviable on delayed duty payments; no penalty imposed.

The Hon'ble Supreme Court clarified that interest under Sec. 11AB of the Central Excise Act is leviable on delayed or deferred payment of duty, including payment of differential duty upon issuance of supplementary invoices. The Tribunal disagreed with a previous High Court decision, holding that the payment of differential duty constituted short payment of duty, attracting interest under section 11AB. However, the Tribunal found it inappropriate to impose a penalty under Sec. 11AC due to favorable decisions for the assessee prior to the Supreme Court ruling. The appeal by the Revenue was disposed of without costs.

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Issues involved: Determination of liability to pay interest under Sec. 11AB of the Central Excise Act and imposition of penalty under Sec. 11AC.

Interest under Sec. 11AB:
The case involved the manufacture of motor vehicle parts clearing goods with a price revision clause. The respondents paid differential duty upon receiving additional amounts for goods already cleared. The issue was whether interest was payable on this differential duty. The Hon'ble Supreme Court clarified that interest under Sec. 11AB is leviable on delayed or deferred payment of duty for any reason. The payment of the differential duty upon issuance of supplementary invoices falls under sub-section (2B) of section 11A. The Tribunal disagreed with a previous High Court decision, stating that the payment of differential duty constituted short payment of duty, attracting interest under section 11AB.

Imposition of Penalty under Sec. 11AC:
Regarding the imposition of penalty under Sec. 11AC, the Tribunal noted that prior to the Supreme Court decision, there were favorable decisions for the assessee. Therefore, in this case, it was not deemed appropriate to impose a penalty under Sec. 11AC of the Central Excise Act.

The Tribunal set aside the Commissioner (Appeals) decision and held that interest was payable by the respondents under Sec. 11AB. However, considering the precedents and lack of intentional wrongdoing, the imposition of a penalty under Sec. 11AC was deemed unnecessary. The appeal filed by the Revenue was disposed of accordingly, with no costs awarded.

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