Interest on differential excise duty follows retrospective price escalation and delayed payment through supplementary invoices.

Interest under Section 11AB of the Central Excise Act, 1944 is payable where differential excise duty arises from retrospective price escalation and is discharged later through supplementary invoices. The applicable principle is that delayed payment of duty following a later upward revision of contract price attracts interest for the period of delay. CESTAT Chennai followed earlier decisions recognising liability on such differential duty and found no infirmity in the appellate authority's order sustaining the demand. The challenge therefore failed and the interest demand was upheld.

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Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 was payable on differential duty paid pursuant to supplementary invoices raised on account of retrospective price escalation.

Analysis: The appellants cleared goods under contracts containing price escalation clauses and subsequently raised supplementary invoices when the price was revised upward. Differential duty was paid later on that basis. The governing principle applied was that where duty becomes payable at a later date because of retrospective revision of price, interest is attracted on the delayed payment of differential duty. The earlier decisions recognising liability to pay interest on such differential duty were followed, and no infirmity was found in the appellate authority's order sustaining the demand.

Conclusion: Interest was correctly demanded on the differential duty, and the challenge to the order failed.

Ratio Decidendi: Interest under Section 11AB of the Central Excise Act, 1944 is payable when differential excise duty arises from retrospective price revision and is paid at a later date through supplementary invoices.

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