TaxTMI 
TaxTMI 
2011 (9) TMI 778
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....r Chapter 73 of the Central Excise Tariff Act, 1985. During the course of audit of the records of the assessee, it was observed that during the period from 1-7-2006 to 31-10-2007, the appellant had raised supplementary invoices to their customers on account of increase in the value of raw materials, labour charges etc. and that while the appellant had paid the differential central excise duty from time to time they did not pay interest thereon as per the provision of Section 11AB read with Section 4 of the Central Excise Act, 1944. The interest payable calculated at appropriate rate for the said period worked out to Rs. 4,37,146/-, which on being pointed by the department, was paid by the appellant. The appellant subsequently filed a refund....
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....e differential duty paid and relies on the judgment of the Hon'ble High Court of Karnataka in the case of C.C.E. Bangalore-III v. Bharat Heavy Electricals Ltd. (BHEL) - 2010 (257) E.L.T. 369 (Kar.) wherein the Hon'ble High Court had taken a view on the facts of those case that the price escalation due to increase in input labour and other costs which was determined by the All India Industrial Price Indices and by the Reserve Bank of India (communicated by All India Electrical Manufacturers Association) interest liability did not arise. The Hon'ble High Court observed that supplementary invoices were issued to facilitate the recovery of the expenditure of cost escalation and the enhanced duty thereon was paid. Therefore, as on the date the g....
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....f clearance of goods and not from receipt of amount under supplementary invoice in terms of provision of the Section 11AB of Central Excise Act, 1944. He, therefore, contends that the confirmation of interest by both the lower authorities is correct in law and the appeal filed by the appellant is devoid of merits. 5. I have carefully considered the rival submissions. 6. In the instant case the goods have been supplied under a contract agreement entered into with the buyer and the contract provides for a price variation clause. The price variation is, inter alia, based on price of raw material and All India Average Consumer Price Index; therefore the appellant knew that the price on which they are discharging duty liability would....
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....ppellant clearly knew that the prices are liable to undergo revision, they should have resorted to provisional assessment. On finalization of the assessment, they should have discharged the differential duty liability along with interest thereon as per the provisions of law. The assessee has not chosen to exercise this option. They did not inform the department that the goods were being supplied on a price determined on provisional basis. As and when the prices underwent revision, they raised supplementary invoices and discharged the duty liability. In other words, they had short paid the duty initially at the time of clearance of the goods and rectified the short payment at a later point of time when they issued supplementary invoices and ....
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....undisputed, namely, accrual of price differential. What does differential price signify? It signifies that value, which is the function of the price, on the date of removal/clearance of the goods was not correct. That, it was understated. Therefore, the price indicated by the supplementary invoice is directly relatable to the value of the goods on the date of clearance, hence, enhanced duty. This enhanced duty is on the corrected value of the goods on the date of removal. When the differential duty is paid after the date of clearance, it indicates short-payment/short levy on the date of removal, hence, interest which is for loss of revenue becomes leviable under Section 11AB of the Act." 6.1 In the light of the clear and categorical d....