Tribunal: Interest under Section 11AB on differential duty is not time-barred

The Tribunal held that interest under Section 11AB is payable on the differential duty paid under supplementary invoices due to retrospective price escalation. The recovery of such interest is not subject to the limitation period prescribed under Section 11A. As a result, the appeals filed by the Revenue were allowed, while the appeals filed by the assessees were dismissed.

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Issues Involved:
1. Whether interest under Section 11AB is payable on the differential duty paid under supplementary invoices due to retrospective price escalation.
2. Whether the recovery of such interest is subject to the limitation period prescribed under Section 11A of the Central Excise Act, 1944.

Detailed Analysis:

1. Interest under Section 11AB on Differential Duty:
The core issue revolves around whether the assessees are liable to pay interest under Section 11AB on the differential duty paid due to retrospective price escalation. The Tribunal referred to the Apex Court's judgments in CCE v. SKF India Ltd. and CCE v. International Auto Ltd., which held that interest under Section 11AB is chargeable on the differential duty paid on price escalation amounts. The Tribunal emphasized that:
- The differential duty paid by the assessees on supplementary invoices falls under Section 11A(2B).
- Interest under Section 11AB is automatic for any delayed payment of duty, regardless of the reason for the delay.

In response to the assessees' argument that the price differential includes an element of interest, which should be deductible from the assessable value, the Tribunal noted:
- This plea was not raised during the adjudication or appellate proceedings and was introduced for the first time at the Tribunal level.
- The assessees failed to provide documentary evidence to substantiate that the price escalation included an interest component.
- The Tribunal drew an adverse presumption that the interest component was not considered in the price escalation, referencing the Supreme Petrochem case for support.

Ultimately, the Tribunal concluded that the interest under Section 11AB is payable on the differential duty paid under supplementary invoices due to retrospective price escalation.

2. Limitation Period for Recovery of Interest:
The second issue concerns whether the recovery of interest is subject to the limitation period prescribed under Section 11A. The Tribunal analyzed:
- Section 11A provides the mechanism for determining duty liability and prescribes a limitation period for issuing show cause notices.
- Interest liability under Section 11AB arises automatically once the duty liability is determined or admitted.
- The Tribunal cited several Supreme Court judgments, including Commissioner of Trade Tax, Lucknow v. Kanhai Ram Thekedar, which held that interest liability is automatic and does not require a separate notice.

The Tribunal differentiated between the adjudication process under Section 11A and the recovery process under Section 11:
- Section 11A deals with the determination of duty liability, requiring a show cause notice within a prescribed limitation period.
- Section 11 deals with the recovery of sums due to the Government, including interest, which does not require a show cause notice and is not subject to the limitation period under Section 11A.

The Tribunal also addressed contrary judgments from the Delhi and Gujarat High Courts but maintained its stance based on the Supreme Court's rulings.

Conclusion:
The Tribunal held that:
- Interest under Section 11AB is payable on the differential duty paid under supplementary invoices due to retrospective price escalation.
- The recovery of such interest is not subject to the limitation period prescribed under Section 11A.

Accordingly, the appeals filed by the Revenue were allowed, and the appeals filed by the assessees were dismissed.

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