Payment of differential duty comes under u/s 11A(2B) and attracts interest

1. SKF India Ltd manufactured and sold ball- bearings and textile machine parts.
2. It sold goods manufactured by it on certain prices on payment of excise duty leviable on the price on which the goods were sold.
3. Later on, there was a revision of prices with retrospective effect.
4. SKF demanded from its customers the balance of the higher prices and issued to them supplementary invoices, and paid differential duty on goods sold earlier.
5. The Revenue demanded interest on differential duty.
6. Commissioner (Appeals)Central Excise allowed the appeal and set-aside the demand.
7. CESTAT dismissed Revenue’s appeal.

On appeal, the Supreme Court held as under:

8. The payment of differential duty by the assessee at the time of issuance of supplementary invoices to the customers demanding the balance of the revised prices clearly falls under the provision of sub-section (2B) of section 11A of the Act.

9. The differential duty was paid only later when the assessee issued supplementary invoices to its customers demanding the balance amounts.

10. Seen thus it was clearly a case of short payment of duty though indeed completely unintended and without any element of deceit etc.

11. The payment of differential duty thus clearly came under sub-section (2B) of section 11A and attracted levy of interest under section 11AB of the Act.

12. For the reasons discussed above we set aside the judgments and orders passed by the Tribunal and the Commissioner (Appeals).

13. We restore the order passed by the Assistant Commissioner in so far as charge of interest is concerned.

Case Reference - Commr.Of Central Excise,Pune vs M/S Skf India Ltd.

Supreme Court of India