In Brief
SAIL sold products to Indian Railways at prices subject to escalation clauses. Initially, excise duty was paid based on provisional prices. When prices were later escalated with retrospective effect, SAIL paid differential excise duty of Rs. 142.78 crores. The Revenue demanded interest under Section 11AB of the Central Excise Act from the date of original removal of goods. The Supreme Court held that interest is payable on such differential duty from the statutory due date prescribed in the rules (the 5th/6th of the following month) based on the month of removal, not from when the escalated price was agreed. The Court affirmed prior decisions in SKF India Ltd. and International Auto Ltd., holding that where prices are provisional and subject to escalation, the enhanced value applies retrospectively as the value at removal, and interest accrues accordingly.
The lawyer headnote and full judgment text are available to registered users.