Case Note & Summary
The dispute arose from the Department's attempt to recover interest on differential duty paid by the assessee under Section 11AB of the Central Excise Act, 1944. The assessee, M/s. International Auto Limited, supplied auto parts to manufacturers like Tata Motors and contended that the prices in the purchase orders were final and not subject to change, thus no interest should be levied. The Department issued a show-cause notice for interest on the differential duty due to price differences between the date of removal and the final sale price. The assessee argued that there was no short-levy or non-levy of duty, and cited a previous judgment in M.R.F. Limited vs. Collector of Central Excise, Madras to support their position. However, the court found no merit in the assessee's submissions, stating that the case was covered by the judgment in Commissioner of Central Excise, Pune vs. SKF India Limited, which clarified that interest is applicable for any short payment of duty, regardless of intent. The court emphasized that the differential duty was paid after the goods were cleared, indicating short payment at the time of removal, thus interest under Section 11AB was applicable. The court concluded that the changes in the law necessitated the imposition of interest on the differential duty, allowing the appeal with no order as to costs.
Headnote
A) Central Excise - Interest on Differential Duty - Levy of Interest - Central Excise Act, 1944, Section 11AB - The court held that interest is leviable on differential duty paid after clearance of goods, as it signifies short payment at the time of removal, thus attracting Section 11AB. The case was distinguished from previous judgments based on changes in the law and the nature of the price differential. (Paras 6-8).
Issue of Consideration
Whether interest is leviable on differential duty paid by the assessee under Section 11AB of the Central Excise Act, 1944.
Final Decision
The Supreme Court allowed the appeal, ruling that interest on differential duty is leviable under Section 11AB of the Central Excise Act, 1944, due to short payment at the time of removal.
Law Points
- Interest on differential duty
- Section 11AB Central Excise Act
- 1944
- short payment of duty
- recovery of duty not levied
- retrospective price revision
