SKF LTD– 2009

Last updated: 13 October 2010

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Court :
SC

Brief :
Issue: When the differential duty is paid immediately upon the recovery of price difference through issuance of supplementary invoice, whether interest shall still be payable on such differential duty?

Citation :
Facts: Assessee is engaged in the manufacture and sale of ball-bearings 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 supplementary 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.

Held: YES “The assessee was able to demand from its customers the balance of the higher prices by virtue of retrospective revision of prices. It, therefore, follows that at the time of sale of goods the goods carried a higher value and thoser were cleared on short payment of duty. The differential duty was paid only when the assessee issued supplementary invoices to its customers demanding the balance amounts. Seen thus it was clearly a case of short-payment of duty though indeed completely unintended and without any element of deceit etd. Thus, it will attract interest liability”.