2010 (10) TMI 474 - AT - Central Excise

Appellate tribunal upholds interest liability on price difference under Central Excise Act

The appellate tribunal rejected the appeal, holding the appellants liable to pay interest under Section 11AB of the Central Excise Act, 1944, on the price ... Demand of interest u/s 11AB - Limitation - There is no time limit fixed by the legislation for payment of interest in respect of the duty confirmed against the assessee - Interest being appending to the principal amount and when the principal amount is to be paid by the assessee to the exchequer, as confirmed in terms of Section 11A, interest liability would arise automatically - In the absence of any provision, laying down any time limit for raising of interest demand and in the light of the Bombay High Court judgment [in the case of CCE, Aurangabad v. Padmashri V.V. Patil S.S.K. Ltd. [2007 (7) TMI 6 - BOMBAY HIGH COURT] liability of interest is to be paid automatically without any notice and as such, the question of limitation does not arise - Hence, the appeal filed by the Appellants is rejected. Issues:1. Demand of interest under Section 11AB of Central Excise Act, 1944 on differential duty.2. Bar on limitation regarding the issuance of supplementary invoices.3. Interpretation of limitation provisions under Section 11A in relation to interest liability under Section 11AB.Analysis:1. The judgment addresses the issue of the demand for interest under Section 11AB of the Central Excise Act, 1944, amounting to Rs. 37,333/- on the differential duty paid by the appellants. The judgment refers to settled law by the Hon'ble Supreme Court in previous cases, establishing that interest is chargeable on the price difference between the original price and the enhanced selling price of goods, as per the proviso to Section 11AB. Consequently, the appellant is held liable to pay interest on the value discrepancy between the original and final selling prices.2. The appellant raised a contention regarding the limitation period for issuing supplementary invoices, arguing that the show cause notice issued after the invoices were raised is time-barred. The judgment cites tribunal decisions in similar cases but concludes that these decisions did not establish a legal point on the limitation of interest demands. The judgment emphasizes that Section 11A, governing duty recovery, does not mention interest, while Section 11AB explicitly outlines interest liability without a specified time limit for payment. Referring to a Bombay High Court case, it is established that interest is automatically chargeable upon delayed duty payment, indicating no time limit for interest demand.3. The analysis delves into the interpretation of limitation provisions under Section 11A and Section 11AB of the Central Excise Act, 1944. It clarifies that Section 11A pertains to duty recovery without addressing interest, while Section 11AB explicitly outlines interest liability without a specified time limit for payment. The judgment emphasizes that interest is inherent to the principal amount and automatically arises when duty payment is confirmed under Section 11A. Citing the Bombay High Court judgment, it reiterates that interest liability is mandatory without the need for a separate notice, thereby dismissing the appellant's argument regarding the limitation period for interest demands.In conclusion, the appellate tribunal rejected the appeal filed by the appellants based on the established legal principles and interpretations of Sections 11A and 11AB of the Central Excise Act, 1944, regarding the demand for interest on differential duty and the absence of a limitation period for interest liabilities.