COMMISSIONER OF CENTRAL EXCISE versus M/S. INTERNATIONALAUTO LIMITED

Citation: [2010] 1 S.C.R. 211 · Decided: 08-01-2010 · Supreme Court of India · Bench: S.H. KAPADIA, AFTAB ALAM · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2010] 1 S.C.R. 211 
COMMISSIONER OF CENTRAL EXCISE 
v. 
M/S. INTERNATIONALAUTO LIMITED 
(Civil Appeal No. 225 of 2010) 
JANUARY 8, 2010 
[S.H. KAPADIA AND AFTAB ALAM, JJ.] 
Central Excise Act, 1944: 
A 
B 
ss. 11-A,(28), Explanation(2) and 11AB- Differential duty c 
- Interest on - HELD: From the Scheme of ss.11A(28) and 
11 AB, it becomes clear that interest is levied for loss of 
revenue on any count - Differential price signifies that value, 
which is the function of the price, on the date of removal/ 
clearance of the goods was not correct -
That it was 
understated -
Therefore, the price indicated by the D 
supplementary invoice is directly relatab/e to the value of the 
goods on the date of clearance and, therefore, enhanced duty 
is payable - This enhanced duty is on the corrected value of 
the goods on the date of removal - When the differential duty 
is paid after the date of clearance, it indicates short payment/ E 
short levy on the date of removal - Therefore, interest, which 
is for loss of revenue, becomes /eviable u/s 11AB. 
Commissioner of Central Excise, Pune vs. SKF India 
Limited (2009) 239 ELT 385, relied on. 
F 
M.R.F. Limited vs. Collector of Central Excise, Madras 
(1997) 92 ELT 309, held inapplicable. 
Case Law Reference: 
(1997) 92 ELT 309 
(2009) 239 ELT 385 
held inapplicable 
para 6 
relied on 
para 7 
211 
G 
H 
2.12 
SUPREME COURT REPORTS 
[2010] 1 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 225 
B 
of 2010. 
From the Judgment & Order dated 10.9.2008 of the High 
Court of Judicature at Bombay in Central Excise Appeal No. 
127 of 2008. 
G.E. Vahanvati, S.G., Chinmoy Pradip Sharma, T.V. 
Ratnam, B.K. Parasad, Anil Katiyar for the Appellant. 
P.C. Jain, Sandeep Jain, Rajesh Kumar, Krishna Kumar 
c R. S., K.S. Mahadevan for the Respondent. 
The foliowing Order of the Court was delivered 
ORDER 
D 
Delay condoned. 
Leave granted. 
In this case, Department seeks to recover interest on 
differential duty, paid by the assessee, under Section 11AB of 
E the Central Excise Act, 1944, which is disputed by the 
assessee. 
During the relevant Assessment Years, assessee supplied 
auto parts to their customers [manufacturers of motor vehicles], 
such as Tata Motors, Mahindra and Mahindra and Piaggio 
F Vehicles Private Limited - who determined the prices of auto 
parts having regard to the cost of raw material, manufacturing 
cost, profit margin, etc. and placed orders with the assessee. 
In case of Tata Motors, orders were placed through internet 
under a software system known as "SRM". 
G 
H 
Since price difference arose between the price on the date 
of removal and the enhanced price at which the goods stood 
ultimately sold, the Department issued a show-cause notice 
proposing to levy interest on the differential duty, paid by the 
COMMISSIONER OF CENTRAL EXCISE v. 
213 
INTERNATIONALAUTO LIMITED 
assessee, under Section 11AB of the Central Excise Act, 1944 
A 
['Act', for short]. 
The case of the assessee, before us, was that.such interest 
was not leviable under Section 11AB of the Act, particularly in 
view of the fact that prices indicated in the purchase orders 
8 
were final during the period of supply of goods. According to 
the assessee, in the present case, the Department has 
accepted the position that the prices in the purchase orders 
were final. Further, according to the assessee herein, there was 
no price variation clause in the purchase orders, therefore, there 
C 
was no scope for increase in prices subsequently and that too, 
retrospectively. In short, according to the assessee, prices 
indicated in the purchase orders were final and not liable to 
change at the time of removal of goods. It was submitted that, 
in the circumstances, the present case was not a case of short-
levy or non-levy of the goods removed by the assessee calling 
D 
for recovery u·nder Section 11A of the Act, hence, this was not 
a case for charging of interest under Section 11AB of the Act. 
Learned counsel appearing on behalf of the assessee 
submitted that this case is squarely covered by the judgement 
of three learned Judges of this Court in the case of M.R.F. 
E 
Limited vs. Collector of Central Excise, Madras, reported in 
[1997) 92 E.L.T.309. 
We find no merit in the submissions advanced on behalf 
of the assessee. The controversy arising in this civil appeal is 
squarely covered by the judgement of this Court in the case of 
Commissioner of Central Excise, Pune vs. SKF India Limited, 

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