IMPORTANT POINT
When different Benches differ on a point of law, the matter should be placed before a larger Bench.

JUDGMENT

A.K. SIKRI, J.

In all these appeals, identical question of law is involved and for the sake of brevity, we are discussing the question of law by taking note of the facts from Civil Appeal No. 2150 of 2012.

2. The appellant/assessee herein, which is a public sector undertaking of the Government of India, has been selling iron and steel products, that are manufactured by it, to the Indian Railways. For this purpose, contract was signed between the said two parties and the goods were being sold to the Indian Railways at the price mutually agreed upon between them. On each removal of these goods for supply to the Railways, the assessee had been paying the excise duty as per the price disclosed by the assessee in the invoices issued at the time of the removal of the goods. Goods in this manner were supplied during the period January, 2005 to July, 2006 which period is involved in the instant appeal. It so happened that there was an upward revision in the price by the Railways in August, 2006 covering the period in question. On that basis, assessee was paid the price difference on the fixation of enhanced consideration for the goods supplied. The assessee paid the differential duty of Rs.142.78 crores voluntarily in August, 2006. According to the Revenue/respondent, since the differential duty was paid in August, 2006 and not paid at the time of clearance of the goods, there was delay in paying the differential duty and, therefore, under Section 11AB of the Central Excise Act, 1944 (hereinafter referred to as the 'Act'), the assessee was liable to pay interest on the differential duty amount paid by it. The contention of the Revenue has been upheld by the Authorities below including Custom Excise and Service Tax Appellate Tribunal (hereinafter referred to as the 'Tribunal').

3. The question, thus, that arises for consideration in these appeals is as to whether interest is leviable under Section 11AB of the Act on the differential duty amount paid under supplementary invoices due to price increase by virtue of price variation clause in the sale contract. Now, facts in some detail:

The assessee is engaged in the manufacture of iron and steel products falling under Chapter 72 and 73 of the schedule of the Central Excise Tariff Act, 1985. The final products manufactured includes rails. The final products manufactured by the assessee are cleared on payment of appropriate duty of excise leviable thereon. The final products are either directly sold at the factory gate or are transferred to various Branch Sales Offices from where they are sold to the customers. The sales either from the factory or from the BSOs are in terms of purchase orders received from the customers. The assessee sold the rails to the Indian Railways in terms of the Price Circular No. LP-06 of 2005 dated 24.02.2005 w.e.f. 01.07.2004.

In terms of the prices quoted in the purchase orders, the assessee discharged central excise duty at the time of removal of the rails to the Indian Railways. Such price was the “transaction value” of the goods in terms of Section 4 of the Act at the given time. In terms of the price variation clause and also in terms of the agreement with the Indian Railways, the price circular dated 24.02.2005 effective from 01.07.2004 was revised upwards with increase in the agreed upon price. A revised price circular No. LP-010/06 dated 20.07.2006 was issued revising the agreed upon price.

In terms of the revised price circular the assessee discharged differential duty of Rs.142,78,88,172/-on the rails cleared during the period from January, 2005 to July, 2006. The differential duty was paid in August, 2006 under intimation to the Departmental Authorities.

4. In the above background, on a scrutiny of ER-1 return filed by the assessee for the month of August, 2006, a show cause notice dated 01.06.2007 was issued to the assessee contending that in respect of the differential duty of Rs.142.78 crores paid in August, 2006, the assessee are required