2019 (8) TMI 252 - AT - Central Excise

Interest payable on differential duty under Central Excise Act clarified by Supreme Court. Limitation aspect ruled in favor of appellant.

Motherson Sumi Electric Wires Versus Commissioner of Central Tax, Bangalore West

Motherson Sumi Electric Wires Versus Commissioner of Central Tax, Bangalore West - TMI Issues:Demand for interest on delayed payment of duty, applicability of Section 11AB of the Central Excise Act 1944, limitation period for recovery of interest on differential duty paid through supplementary invoices.Analysis:1. Demand for Interest on Delayed Payment of Duty:The appeals were filed against an order upholding the demand for interest on delayed payment of duty. The appellants, manufacturers of excisable goods, faced charges of interest on differential duty paid through supplementary invoices following a revision of prices with retrospective effect. The original authority and the Commissioner confirmed the interest and imposed penalties. The issue revolved around whether the Department could demand interest on the differential duty paid through supplementary invoices due to a subsequent increase in the price of goods.2. Applicability of Section 11AB of the Central Excise Act 1944:The counsel for the appellant argued that conflicting decisions existed on the issue of interest demand, citing the Steel Authority of India Ltd. cases. The Supreme Court's decision clarified that interest is payable on differential duty paid through supplementary invoices. The counsel contended that the demand for interest was barred by limitation, relying on various decisions establishing the time limit under Section 11A of the Central Excise Act for recovery of interest. The AR defended the impugned order, asserting that the law, as per SKF India Ltd. until 2015, required payment of interest.3. Limitation Period for Recovery of Interest on Differential Duty:The Tribunal, after considering submissions, held that interest was payable on the differential duty paid through supplementary invoices per the settled position by the Supreme Court. The time limit prescribed under Section 11A was deemed applicable for interest recovery. The Tribunal rejected the invocation of the extended period of limitation due to lack of fraud or suppression to evade duty payment. Citing relevant case laws, the Tribunal concluded that the demand for interest on supplementary invoices was barred by limitation, allowing the appeals solely on the limitation aspect, not on merit.In conclusion, the judgment addressed the demand for interest on delayed duty payment, the applicability of Section 11AB of the Central Excise Act, and the limitation period for interest recovery on differential duty paid through supplementary invoices, ultimately ruling in favor of the appellant based on the limitation issue.