INTEREST FOR INCREASE IN PRICE WITH RETROSPECTIVE EFFECT

[SUPRAKASH MITTRA]

An excisable product is cleared regularly on payment of Central Excise Duty. A memorandum of understanding (MOU) is signed between of buyer & seller on 21/01/2012 wherein the price of the product is increased from restrospective effect from 01/04/2011.

Differential billing is done for the increased price & central excise duty on the same is paid. The department has raised a demand for interest u/s 11A/11AA of central Excise Act,1944. on the differential amount from 01/04/2011 treating the it to be short payment of central excise duty. 

Is the claim of the department justified as the the increase in price is from retrospective effect?

Though the Hon'ble Supreme Court in the case of CCE Vs SKF India Ltd. (2009 (7) TMI 6 - SUPREME COURT)= 2009 (239) ELT 385 (SC) held that interest is payable.

central Excise Act has undergone a lot of changes in this regard after the Yr. 2009. Please give some valuable suggestions in this regard 

AI Summary

Interest Demand on Retrospective Price Hike Valid Under Sections 11A/11AA of Central Excise Act, 1944 An excisable product was regularly cleared with Central Excise Duty. A memorandum of understanding between the buyer and seller, dated 21/01/2012, increased the product's price retroactively from 01/04/2011. Differential billing and excise duty were paid on the increased price. The department demanded interest under sections 11A/11AA of the Central Excise Act, 1944, on the differential amount, considering it a short payment. The query questioned the department's justification due to the retrospective price increase. Respondents agreed that interest is payable, referencing a Supreme Court ruling, despite changes in the Central Excise Act post-2009.