2003 (11) TMI 406 - AT - Central Excise

Summary

Issues:
1. Recovery of higher notional credit.
2. Confirmation of interest in terms of Section 11AA.
3. Justification of interest amount post enactment of Section 11AA.

Analysis:
1. The appellants were issued a show cause notice for the recovery of higher notional credit. The Assistant Commissioner confirmed this notice, which was later upheld by the Commissioner (Appeals). The appellants then appealed to the Tribunal while depositing the disputed amount. The Tribunal rejected the appeal against disallowing the Modvat credit, leading to the Commissioner (Appeals) justifying the interest amount post three months from the enactment of Section 11AA until payment. The appellants challenged this decision.

2. The appellants argued that the proposal to confirm interest was premature as the matter was pending before the Tribunal, and the original show cause notice did not include any proposal for interest confirmation. However, the Tribunal found no merit in this argument. It was noted that Section 11AA was enacted after the original show cause notice, and since the appellants' appeal was rejected, they were required to pay interest on the confirmed demand as per the provisions of Section 11AA. The Commissioner's decision to start interest calculation three months after the enactment of Section 11AA until duty payment was deemed appropriate.

3. The Tribunal upheld the Commissioner's decision, emphasizing that the demand for interest was valid as per the provisions of Section 11AA. The rejection of the appeals by the appellants was based on the clear requirement for interest payment on the confirmed demand, starting from a specified period after the enactment of Section 11AA until the duty payment. The Commissioner's reasoning and decision were found to be legally sound, leading to the dismissal of the appeals filed by the appellants.