2014 (7) TMI 566 - AT - Central Excise

Tribunal Upholds Interest on Supplementary Invoices, Penalty Overturned

The Tribunal upheld the demand for interest on the appellant's issue of supplementary invoices for price variation in goods sold earlier, citing the ... Levy of interest on differential duty raised through supplementary invoice - retrospective increase of price of finished goods - Held that:- Payment of differential duty at a later date is clearly a case of short payment of duty though completely unintended and without element of deceit but interest is payable for the delayed payment. The Hon'ble Supreme Court upheld the demand of interest and set aside the penalty. It is seen that the said order of the Supreme Court was followed in later judgement in the case of CCE Vs International Auto Ltd. - [2010 (1) TMI 151 - SUPREME COURT OF INDIA]. In view of that, we uphold the demand of interest and set aside the penalty - Decided partly in favour of assessee. Issues:1. Whether the appellant is required to pay interest on issue of supplementary invoices to customers on price variation in respect of goods sold earlier.2. Whether a penalty should be imposed on the appellant.Analysis:Issue 1: Interest on issue of supplementary invoicesThe Tribunal found that the appellant raised supplementary invoices to customers with a retrospective increase in the price of finished goods and paid duty at the time of issuing these invoices. The main question was whether the appellant is obligated to pay interest on such supplementary invoices. The adjudicating authority had confirmed the demand for interest along with a penalty. The Tribunal referred to the appellant's own case where a similar issue was dismissed by the Tribunal. Additionally, the Tribunal considered relevant High Court decisions presented by the Revenue. Citing the Supreme Court's decision in the case of CCE Pune Vs SKF India Ltd., the Tribunal held that payment of differential duty at a later date amounts to short payment of duty, requiring the payment of interest for the delayed payment. Following the Supreme Court's rulings, the Tribunal upheld the demand for interest in this case.Issue 2: Penalty impositionRegarding the penalty, the Tribunal noted that the Supreme Court in the case of CCE Pune Vs SKF India Ltd. had set aside the penalty while upholding the demand for interest on delayed payment of duty. Consistent with this precedent, the Tribunal decided to set aside the penalty imposed on the appellant. Consequently, all the appeals were partly allowed, with the demand for interest upheld and the penalty being set aside. The Tribunal disposed of the stay applications in light of its decision.