Case Note & Summary
The case involves an appeal by Gammon India Ltd. (formerly Associated Transrail Structures Ltd.) against an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Branch, Mumbai, dated 22.9.2011. The Tribunal had upheld the liability of the assessee to pay interest under Section 11AB of the Central Excise Act, 1944 on the differential amount of duty arising from a price variation clause. The assessee had cleared goods at the price prevailing on the date of clearance and paid duty accordingly. Subsequently, the price was hiked, and the assessee raised a demand and paid the differential duty. During audit, the department discovered that interest on the differential duty had not been paid. The assessee credited the interest amount and then applied for its refund, which was rejected. The rejection was upheld by CESTAT, relying on the Supreme Court judgment in Commissioner of Central Excise v. International Auto Ltd. (2010) 250 ELT 3 (SC). The assessee argued that the facts were identical to those in CCE Bangalore III v. Bharat Heavy Electricals Ltd. (2010) 257 ELT 369 (Kar.), where the Karnataka High Court had held that interest under Section 11AB is not payable on differential duty arising from a price variation clause. The department's SLP against that judgment was dismissed by the Supreme Court on 3.12.2010, and review was also dismissed on 17.8.2011. The assessee contended that the dismissal of SLP amounted to acceptance of the Karnataka High Court's reasoning. The department argued that the dismissal of SLP does not create a binding precedent and that the Supreme Court's decision in International Auto Ltd. was directly applicable. The High Court held that the question of liability to pay interest on the differential amount does not constitute a substantial question of law. The court noted that the Supreme Court in International Auto Ltd. had already decided the issue, and the Karnataka High Court judgment was distinguished on facts. The dismissal of SLP does not amount to affirmation of the Karnataka judgment. Therefore, the appeal was dismissed.
Headnote
A) Central Excise - Interest on Differential Duty - Section 11AB Central Excise Act, 1944 - Price Variation Clause - The assessee cleared goods at prevailing price and paid duty accordingly; later price was hiked and differential duty paid. The issue was whether interest under Section 11AB is payable on the differential duty. The court held that the judgment of the Supreme Court in Commissioner of Central Excise v. International Auto Ltd. (2010) 250 ELT 3 (SC) squarely applies, and the Karnataka High Court judgment in CCE Bangalore III v. Bharat Heavy Electricals Ltd. (2010) 257 ELT 369 (Kar.) was distinguished on facts. The dismissal of SLP against the Karnataka judgment does not create a binding precedent. Hence, no substantial question of law arises. (Paras 2-5) B) Precedent - Dismissal of Special Leave Petition - Binding Effect - The court noted that dismissal of an SLP does not amount to affirmation of the judgment under challenge and does not create a binding precedent. Therefore, the Karnataka High Court judgment cannot override the Supreme Court's decision in International Auto Ltd. (Paras 4-5)
Issue of Consideration
Whether the liability of the appellant to pay interest on differential amount of sale price under Section 11AB of the Central Excise Act, 1944 constitutes a substantial question of law.
Final Decision
The appeal is dismissed. The court held that no substantial question of law arises as the issue is covered by the Supreme Court judgment in Commissioner of Central Excise v. International Auto Ltd. The dismissal of SLP against the Karnataka High Court judgment does not create a binding precedent.
Law Points
- Interest on differential duty
- Section 11AB Central Excise Act
- 1944
- Price variation clause
- Substantial question of law
- Dismissal of SLP does not create binding precedent
