06 December 2013
The amount recovered by the issue of supplementary invoice would have to be included in the transaction value of goods sold. Accordingly, excise duty would be payable on the same.
Based on the Supreme Court judgment in the case of CCE, Pune v SKF India Ltd and High Court judgment in the case of Bharat Heavy Electricals Ltd v CCE, Bangalore III, a company would not be liable to pay interest for the delayed payment of excise duty only in cases where the price revision of goods is on account of a reason beyond its control, such as an increase in electricity duty tariffs with retrospective effect, resulting in an increase in the cost of production.
it is to state that the Apex Court in the case of SKF Ltd ruled that interest is payable on the differential duty paid through supplementary Invoices, due to Price escalation with retrospective effect, taking into consideration all the four Sections 11 A (including proviso to Section 11A, 11 A(2B), 11 AA, 11 AB and 11 AC of the CEA 1944, and not merely on the facts involved in SKF case. The Apex Court judgemet clearly rules that interest is payable not only on the differential price collected by a manufacturer but also on the differential price received by him.
It is common in the trade that price escalation happens mainly because price of certain main raw material is not stable.
It is to be seen what will happen to the H.C decision, on appeal before the Supreme Court, and how the H.C decision to be seen in the light of Article 141 of the Constitution.
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