COMMISSIONER OF CENTRAL EXCISE Vs. SKF INDIA LTD

JUDGEMENT

(1.) Just a few weeks ago in Union of India vs. M/s. Rajasthan Spinning and Weaving Mills (Appeal arising from SLP (C) No. 15927 of 2007) we had the occasion to examine the nature and scope of the penalty provision in the Central Excise Act as contained in Section 11 AC, one of the four sections, forming a quartet, concerning recovery of unpaid duty, interest on deferred payment/realisation of duty and penalty for non-payment of duty. In this case we are called upon to consider the conditions that would attract the levy of interest on excise duty not levied or short levied, not paid or short paid or erroneously refunded as provided under Sections 11 A, 11AA and 11AB of the Act. It may thus be seen as the sequel to the earlier decision in M/s. Rajasthan Spinning and Weaving Mills.

(2.) The facts of the case are fairly simple and admitted by both sides. The respondent-assessee is engaged in the manufacture and sale of ball-bearing and textile machine parts. It sold goods manufactured by it on certain prices on payment of excise duty leviable on the price on which the goods were sold. Later on, there was a revision of prices with retrospective effect. Following the revision the assessee demanded from its customers the balance of the higher prices and issued to them Suppl lementary invoices. At the same time it also paid the differential duty on the goods sold earlier. The Revenue took the view that the assessee was liable to pay interest on differential duty. The assessee was given a notice dated April 4, 2006 demanding Rs. 95,590/- as interest on delayed payment of duty under Section 11 AB of the Central Excise Act and further asking it to show cause why penalty may also not be imposed on it under Section 37(3) of the Act. The assessee gave its reply stating that the payment of differential duty was made by it at the time of issuing Suppl lementary invoices to the customers and, therefore, there was no question of charging interest much less any penalty. However, the Assistant Commissioner Central Excise, Pune II Division, confirmed the demand of interest by his order dated June 5, 2006 and further imposed a penalty of Rs. 5,000/- against the assessee. The assessee took the matter in appeal before the Commissioner (Appeals) Central Excise, Pune I, who by his order dated August 30, 2006 allowed the appeal and set-aside the order of the Assistant Commissioner. The Revenue then brought the matter before the Customs, Excise and Service Tax Appellate Tribunal but its appeal was dismissed by order dated January 3, 2008. The Tribunal, following certain decisions of the Bombay High Court held that no interest was chargeable where there was no time-gap between the payment of the differential duty and issuance of Suppl lementary invoices to the customers on the basis of upward revision of prices in respect of the goods sold earlier.

(3.) Aggrieved by the order of the Tribunal, the Revenue has come to this Court in appeal.