2013 (6) TMI 559 - HC - Central Excise

Court Upholds Interest Liability on Sale Price Differential

The High Court upheld the liability of the appellant to pay interest on the differential amount of sale price under Section 11AB. The Court emphasized ... Interest on differential duty - price escalation clause - Held that:- Thus, liability to pay interest on short payment of duty appears to be absolute and reasons for such short payment are not germane. This finding in S.K.F. India Ltd. [2009 (7) TMI 6 - SUPREME COURT] has been endorsed again by the Hon'ble Apex Court in [2010 (1) TMI 151 - SUPREME COURT OF INDIA]. Dismissal of S.L.P. in motion hearing by Hon'ble Apex Court is not sufficient to ignore its binding judgment. It is, therefore, apparent that appreciation of law, as laid down in S.K.F. India Ltd. [2009 (7) TMI 6 - SUPREME COURT] by the apex court needs to be acted upon and implemented by this Court. Thus, the question sought to be raised is already conclusively answered and cannot be treated as a substantial question of law at all. Moreover, the appellant made good the short duty only after it was brought to his notice by the respondents - Levy of interest confirmed. Issues:1. Liability of appellant to pay interest on differential amount of sale price.Analysis:The judgment concerns the liability of the appellant to pay interest on the differential amount of sale price. The appellant contested the order passed by CESTAT, which upheld the liability under Section 11 AB. The appellant argued that the judgment of the Hon'ble Apex Court in a previous case was distinguished by the Karnataka High Court, and the same reasoning should apply in their case. However, the Department contended that the judgment in another case was final and needed to be applied. The Department emphasized that the appellant should have sought provisional clearance to avoid interest liability. The appellant relied on the Karnataka High Court's decision, which found that the increased price became payable due to later revisions, and the appellant could not have foreseen it at the time of clearance. The High Court concluded that the law laid down by the Hon'ble Apex Court in a previous case was not applicable.The judgment highlighted the observations made by the Hon'ble Apex Court in a subsequent case regarding the recovery of duty and interest on delayed payment. The Court emphasized that the differential duty paid after the date of clearance indicated shortpayment/shortlevy on the date of removal, justifying the levying of interest under Section 11AB. The Court clarified that the judgment in a previous case concerning a refund claim did not apply to the current scenario, where the imposition of interest aimed to compensate the Department for revenue loss. The Court reiterated that liability to pay interest on short payment of duty was absolute, regardless of the reasons for the short payment. The CESTAT in the impugned order correctly understood and applied the legal position, leading to the dismissal of the appeal as no substantial question of law was found to arise. The appellant had rectified the short duty payment only after being notified by the respondents, further supporting the decision to uphold the liability for interest payment.In conclusion, the judgment delves into the complex legal aspects surrounding the liability of the appellant to pay interest on the differential amount of sale price. The analysis of previous judgments, the application of relevant legal provisions, and the considerations of revenue loss and duty payment timelines were crucial in determining the outcome of the case. The Court's detailed examination and interpretation of the law led to the dismissal of the appeal, emphasizing the absolute nature of the liability for interest on short payment of duty.