2015 (7) TMI 184 - AT - Central Excise

Interest chargeable on differential duty paid through supplementary invoices confirmed by Tribunal. Appeals dismissed. Judgment pronounced.

The Tribunal upheld the Commissioner (Appeals) order, confirming that interest is chargeable on the differential duty paid through supplementary invoices ... Demand of interest - whether the appellant is required to pay interest on the differential duty paid on account of price variation raised through the supplementary invoices before taking into account the provisional assessment availed by the appellant - Held that:- appellant opted for provisional assessment on account of price variation clause in each of the contract. There is no dispute on the fact though they opted for provisional assessment immediately on finalising the price they raised supplementary invoice for recovering the amount from buyers and paid the differential duty. In this regard, I find that the Principal Bench of this Tribunal in the appellant s own case reported in BHEL Vs CCE Bhopal (2011 (6) TMI 396 - CESTAT, DELHI), has discussed the identical issue in depth and held against the appellant. By respectfully following the Supreme Court decision in SKF India Ltd. [2009 (7) TMI 6 - SUPREME COURT] and the Tribunal's Principal Bench decision, I hold that interest is chargeable on the differential duty paid through supplementary invoices raised by the appellants. - Decided against assesssee. Issues Involved:1. Demand of interest on differential duty paid on supplementary invoices due to price variation.2. Applicability of Rule 7(4) of Central Excise Rules (CER) regarding interest on differential duty.3. Relevance of the Supreme Court decision in the case of CCE Pune Vs SKF India Ltd. to the current case.4. Reliance on previous judgments including those of the Bombay High Court and Tribunal decisions.Issue-wise Detailed Analysis:1. Demand of Interest on Differential Duty Paid on Supplementary Invoices Due to Price Variation:The appellant, a manufacturer of Boiler Auxiliary products, opted for provisional assessment under Rule 7 of CER due to price variation clauses in their contracts. Upon finalizing the prices, they paid the differential duty by issuing supplementary invoices before the final assessment. The jurisdictional Assistant Commissioner finalized assessments for different periods, demanding interest under Rule 7(4) of CER for two orders while not demanding interest for five other orders. The Commissioner (Appeals) held that interest is chargeable on the differential duty paid under supplementary invoices, rejecting the assessee's appeals and allowing the Revenue's appeals.2. Applicability of Rule 7(4) of Central Excise Rules (CER) Regarding Interest on Differential Duty:The appellant argued that interest is not payable as they paid the differential duty before the finalization of provisional assessment. According to Rule 7(4) of CER, interest is demandable on the differential duty from the first day of the month succeeding the month for which such amount is determined till the date of payment. The appellant contended that since there was no differential duty payable on account of the final assessment, no interest is payable. However, the Commissioner (Appeals) interpreted that interest is chargeable from the 1st day of the month succeeding the month for which duty is finalized, relying on the Supreme Court's decision in the case of CCE Pune Vs SKF India Ltd.3. Relevance of the Supreme Court Decision in the Case of CCE Pune Vs SKF India Ltd. to the Current Case:The appellant argued that the SKF India Ltd. case is not applicable as it did not involve provisional assessment. They cited the Bombay High Court's decision in Ceat Ltd. Vs CCE, which distinguished the SKF India Ltd. judgment. However, the Tribunal found that the Principal Bench of the Tribunal in the appellant's own case (BHEL Vs CCE Bhopal) had already discussed the identical issue and held against the appellant, thereby making the SKF India Ltd. decision applicable. The Tribunal emphasized that the interest liability would commence from the month succeeding the day on which duty was due and payable in relation to the goods cleared.4. Reliance on Previous Judgments Including Those of the Bombay High Court and Tribunal Decisions:The appellant relied on several case laws, including Ispat Industries Ltd. and Tata Motors Ltd., to support their contention. However, the Tribunal noted that the Principal Bench's decision in the appellant's own case had not been set aside or stayed by any higher court, making it binding. The Tribunal also clarified the interpretation of the expression 'the month for which such amount is determined' in Rule 7(4) of CER, concluding that it refers to the month for which the amount is determined pursuant to the finalization of assessment, and hence, interest liability would commence accordingly.Conclusion:The Tribunal upheld the Commissioner (Appeals) order, confirming that interest is chargeable on the differential duty paid through supplementary invoices raised by the appellants. The appeals were dismissed, and the judgment was pronounced in open court on 30.06.2015.