2005 (1) TMI 557 - AT - Central Excise

Summary

Issues:
1. Disallowance of Cenvat credit and imposition of penalty.
2. Detention of excisable goods for non-payment of interest.
3. Jurisdiction of Appellate Tribunal in granting stay.

Issue 1: Disallowance of Cenvat credit and imposition of penalty
The case involved M/s. International Tobacco Co. Ltd. where the Deputy Commissioner disallowed Cenvat credit of Rs. 44,32,127.54, imposed a penalty of Rs. 44 lakhs, and demanded interest at 24%. The Commissioner (Appeals) upheld the disallowance, leading to detention of excisable goods valued at Rs. 42,07,833 due to non-payment of interest. The Appellant argued that despite depositing the disallowed amount and penalty, the Revenue detained their goods for interest without allowing them to contest the interest amount. The Appellate Tribunal was urged to exercise inherent powers under Rule 41 of the CEGAT (Procedure) Rules, 1982.

Issue 2: Detention of excisable goods for non-payment of interest
The Appellant had already deposited the disallowed Cenvat credit and penalty, totaling over Rs. 88 lakhs. However, the Revenue detained their excisable goods worth Rs. 42,07,833 for non-payment of interest. The Appellant contended that the Revenue's action was coercive, as they were not given an opportunity to challenge the interest amount. The Tribunal noted that while Section 35F of the Central Excise Act allows stay of duty and penalty, it does not explicitly mention interest. Considering the entire duty and penalty were paid, the Tribunal deemed the detention for interest recovery unnecessary and dismissed the stay petition as infructuous.

Issue 3: Jurisdiction of Appellate Tribunal in granting stay
The Appellate Tribunal analyzed the scope of Section 35F of the Central Excise Act, which pertains to the stay of duty and penalty but is silent on interest recovery. Despite the Appellant depositing the duty and penalty, the Revenue detained goods for interest payment. The Tribunal concluded that the stay petition became infructuous due to full payment of duty and penalty by the Appellant. Consequently, the Tribunal dismissed the stay petition and scheduled the appeal for regular hearing on a later date.

This judgment highlights the Appellate Tribunal's role in addressing disputes related to Cenvat credit, penalties, and interest payments under the Central Excise Act. It emphasizes the need for procedural fairness and adherence to statutory provisions while dealing with recovery actions by the Revenue.