LAWS(CE)-2009-10-127

COMMISSIONER OF CENTRAL EXCISE Vs. ISMT LTD.

Decided On October 26, 2009
COMMISSIONER OF CENTRAL EXCISE Appellant
V/S
Ismt Ltd. Respondents

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, I find that this appeal of the department aims at levy of interest under Section 11AB from the respondent and imposition of penalty on them under Section 11AC. It appears, after clearance of the goods on payment of duty at the price originally agreed between the assessee (seller) and their buyer, there was a price hike on the basis of a price variation clause contained in the contract and consequently, the assessee issued supplementary invoice to collect the differential price from the buyer as also to pay the differential duty to the exchequer. The assessee, however, did not volunteer to pay any interest on the amount of differential duty from the date of original clearance of the goods to the date of payment of differential duty. In this scenario, the department issued a show -cause notice claiming interest under Section 11AB and proposing penalty under Section 11AC, both of which were contested by the party. In adjudication of the dispute, the original authority demanded interest of Rs. 5,323/- and imposed penalty of Rs. 2,87,767/-. The aggrieved assessee preferred an appeal to the Commissioner (Appeals) and the latter set aside the demand of interest and also the penalty. In the present appeal, the department has referred to the provisions of Section 11A(2B) of the Central Excise Act and has contended that the assessee is liable to pay interest under Section 11AB read with Section 11A(2B) of the Act. Today, it is submitted by the learned SDR that the issue is no longer res integra as the Hon'ble Supreme Court has settled the same in favour of the Revenue in the case of CCE, Pune v. SKF India Ltd., 2009 TIOL 82 SC -CX. In the cited case, on a set of facts similar to the facts of the instant case, Their Lordships held that the assessee was liable to pay interest under Section 11B on the differential amount of duty paid under supplementary invoice, for the period from the date of clearance of the goods to the date of payment of differential duty. In view of the Hon'ble Supreme Court's ruling, the department succeeds on the interest-related issue.

(2.) THE appellant has invoked Section 11AC to penalise the assessee on the ground of non-payment of interest on differential duty. However, they have not shown that Section 11AC is invokable for such purpose on such ground.