2015 (5) TMI 134 - AT - Central Excise

Interest payable on differential duty despite early payment; penalty waived; Tribunal rules in favor of respondent.

The Tribunal held that interest is payable on the differential duty paid on price variation raised on supplementary invoices, citing a Supreme Court ... Interest on differential duty determined after issuance of supplementary invoices - application of sub-section (2B) of Section 11A and levy of interest under Section 11AB for short payment of duty - interest under Rule 7(4) of CER, 2002 payable from the month succeeding determination - interest on differential duty upon finalisation of provisional assessment where differential amount had already been paid - waiver of penalty where there was no intention to evade and prior conflicting decisions existedInterest on differential duty determined after issuance of supplementary invoices - application of sub-section (2B) of Section 11A and levy of interest under Section 11AB for short payment of duty - waiver of penalty where there was no intention to evade and prior conflicting decisions existed - Liability to pay interest on differential duty paid consequent to issuance of supplementary invoices in a normal assessment and whether penalty should be imposed. - HELD THAT: - Applying the ratio of the Hon'ble Supreme Court in CCE v. SKF India Ltd., the Tribunal held that where supplementary invoices are issued to recover upward revision of prices and differential duty is paid thereafter, the situation constitutes short payment of duty falling within sub-section (2B) of Section 11A and attracts interest under Section 11AB. Consequently the adjudication order charging interest was restored. However, having regard to conflicting judicial decisions prior to the Supreme Court clarification and the absence of any deliberate evasion, the Tribunal waived the penalty that had been imposed by the adjudicating authority. [Paras 7]Revenue's appeal partly allowed: interest demand restored; penalty waived.Interest under Rule 7(4) of CER, 2002 payable from the month succeeding determination - interest on differential duty upon finalisation of provisional assessment where differential amount had already been paid - Chargeability of interest on differential duty consequent to finalisation of provisional assessment when the assessee had already paid the differential duty before finalisation. - HELD THAT: - Following the Tribunal's earlier order in the respondents' own case and the decisions in the Ispat line of authorities (as affirmed by higher fora), the Tribunal found that where differential duty, if any, was not outstanding on the date of determination because the assessee had already paid the differential duty, interest is not chargeable under the applicable rule. On that basis the Tribunal upheld the Commissioner (Appeals) order setting aside the interest demand in respect of the provisional assessment. [Paras 8]Revenue's appeal rejected; impugned order upholding absence of interest demand is maintained.Final Conclusion: Revenue's appeal E/1060/05 is partly allowed - interest liability on supplementary-invoice differential duty restored but penalty waived; Revenue's appeal E/356/2006 is rejected and the impugned order upholding no interest demand on finalisation of provisional assessment is affirmed. Issues:1. Demand of interest on differential duty paid on price variation raised on supplementary invoices.2. Demand of interest on differential duty paid consequent to finalization of provisional assessments.Analysis:1. The first issue involved the demand of interest on the differential duty paid subsequently on the price variation raised on supplementary invoices. The adjudicating authority confirmed the demand of interest and imposed a penalty. The Commissioner (Appeals) set aside the order and allowed the appeal with consequential relief. The Revenue filed an appeal against the impugned order. The Revenue argued that interest is payable from the date the duty amount is due as per Rule 7(4) of CER, 2002, relying on the Supreme Court judgment in CCE Vs. SKF India Ltd. The respondents contended that interest is not chargeable as they had already paid the differential duty on their own calculation before finalization. The Tribunal referred to the Supreme Court judgment and held that the respondents are liable for payment of interest, setting aside the impugned order partially and waiving the penalty due to conflicting decisions on interest payment.2. The second issue pertained to the demand of interest on the differential duty paid consequent to the finalization of provisional assessments. The Tribunal cited a similar case decided by the Mumbai High Court and a previous decision of the same Bench in favor of the respondent. By following the Apex Court judgment and the Tribunal's decision in the respondent's case, the Tribunal rejected the Revenue's appeal and upheld the impugned order. The appeal related to the finalization of provisional assessments for a specific period, and the Tribunal found in favor of the respondent based on legal precedents and previous decisions. The judgment concluded by partly allowing one appeal and rejecting the other, with the penalty being waived in the first case and the impugned order being upheld in the second case.