Court Upholds Interest Demand on Supplementary Invoices; Emphasizes Adherence to Supreme Court Rulings

The court upheld the demand for interest under Section 11AB on supplementary invoices for payment of differential duties, rejecting the appellant's argument that no interest was payable as the duty was voluntarily paid. The court emphasized the binding nature of the Supreme Court's decision in *Commissioner of Central Excise v. SKF India Ltd.* overruling conflicting High Court decisions, including *Bharat Heavy Electricals Ltd. (BHEL)*. The appeals were dismissed, affirming the lower authorities' decisions and emphasizing adherence to Supreme Court rulings on Sections 11A and 11AB of the Central Excise Act, 1944.

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Issues Involved:
1. Liability to pay interest under Section 11AB of the Central Excise Act, 1944, on raising supplementary invoices.
2. Ignoring the Karnataka High Court decision in BHEL.
3. Following the Karnataka High Court decision in Presscom despite conflicting decisions.
4. Preference for decisions favoring the assessee when multiple judgments exist.

Detailed Analysis:

1. Liability to Pay Interest under Section 11AB:
The primary issue revolved around whether the appellant is liable to pay interest under Section 11AB of the Central Excise Act, 1944, on supplementary invoices raised due to price revisions. The appellant argued that interest under Section 11AB applies only when there is a demand by the department due to short payment, and since they paid the differential duty voluntarily upon price revision, no interest is payable. The court, referencing the Supreme Court's decision in *Commissioner of Central Excise v. SKF India Ltd.*, clarified that Section 11A categorizes non-payment or short payment of duty into intentional and unintentional. The unintentional category, as per Section 11A(2B), still mandates interest under Section 11AB for delayed payments. The court concluded that the payment of differential duty via supplementary invoices falls under Section 11A(2B), attracting interest under Section 11AB, thus rejecting the appellant's argument.

2. Ignoring the Karnataka High Court Decision in BHEL:
The appellant contended that the first respondent ignored the Karnataka High Court's decision in *Bharat Heavy Electricals Ltd. (BHEL)*, which held that interest is not payable on supplementary invoices. The court noted that the Supreme Court's ruling in *SKF India Ltd.* overrides the BHEL decision. The BHEL decision was considered per incuriam (not properly considering relevant law) by another Division Bench of the Karnataka High Court in *Commissioner of Central Excise v. Presscom Products*. The court emphasized that the Supreme Court's decision in *SKF India Ltd.* is binding and takes precedence.

3. Following the Karnataka High Court Decision in Presscom:
The appellant questioned the reliance on the *Presscom* decision, arguing it conflicted with the BHEL decision and was not referred to a Full Bench despite both being Division Bench decisions. The court reiterated that the *Presscom* decision, which aligns with the Supreme Court's ruling in *SKF India Ltd.*, correctly interprets the law. The decision in *BHEL* was found to be per incuriam, and thus, the reliance on *Presscom* was justified.

4. Preference for Decisions Favoring the Assessee:
The appellant argued that when two decisions exist on the same issue, the one favoring the assessee should be followed. However, the court dismissed this argument, stating that the Supreme Court's decision in *SKF India Ltd.* is authoritative and binding, thus taking precedence over conflicting High Court decisions. The court emphasized that the law declared by the Supreme Court must be followed, irrespective of conflicting High Court judgments.

Conclusion:
The court dismissed the appeals, upholding the demand for interest under Section 11AB on differential duties paid through supplementary invoices. The decisions of the lower authorities and the Tribunal were affirmed, and the substantial questions of law were answered against the assessees. The court emphasized the binding nature of the Supreme Court's rulings and the proper interpretation of Sections 11A and 11AB of the Central Excise Act, 1944.

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