No liability to pay interest in a revenue-neutral situation

Jai Balaji Industries Limited Vs Commissioner of Central Excise, Bolpur (CESTAT Kolkata)

The CESTAT, Kolkata in M/s Jai Balaji Industries Limited v. Commissioner of Central Excise, Bolpur [Excise Appeal No. 552 of 2011 dated June 22, 2023] set aside the order confirming interest on differential duty and held that where the differential duty paid by the assessee is available as CENVAT credit to the Assessee’s sister concern then it is a revenue-neutral situation. Thus, as duty was not actually payable, the payment of interest does not arise in the case of revenue neutral situation.

Facts:

M/s Jai Balaji Industries Limited (“the Appellant”) is engaged in manufacturing of iron and steel products. The Appellant sells finished products to independent buyers at the factory gate at which the Appellant was paying duty on the transaction value as determined in terms of section 4(1)(a) of the Central Excise Act, 1944 (“the Excise Act”).

Besides it, the Appellant also transferred products to its sister units on which the Appellant was paying duty in terms of Rule 4 of the Central Excise Valuation Rules, 2000 (“the Excise Rules”) which was being used by the sister units as input of production.

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