2006 (3) TMI 373 - AT - Central Excise

Exemption VABAL - Violation of conditions of notification - Amnesty scheme - Interest paid under compulsion

Summary

Issues:
- Interpretation of Amnesty Scheme applicability
- Violation of Notification No. 203/92-Cus.
- Coercion by the Department for payment of interest
- Refund of interest under Section 11BB of the Central Excise Act

Interpretation of Amnesty Scheme Applicability:
The Revenue appealed against a previous order, questioning CESTAT's determination that interest payment was not in line with the Amnesty Scheme. The High Court remanded the matter, emphasizing that CEGAT should have assessed if the appellant violated conditions of Notification No. 203/92-Cus. and the Value-Based Advance Licensing Scheme to qualify for the Amnesty Scheme. The appellant argued they were not eligible for the Amnesty Scheme as they were not exporters or VABAL license holders, and did not import materials under the relevant notification. The Tribunal found that the appellant did not violate the conditions of the notification and thus was not eligible for the Amnesty Scheme.

Violation of Notification No. 203/92-Cus.:
The Tribunal examined the conditions of Notification No. 203/92-Cus., which exempted materials imported against Value-Based Advance Licenses from customs duty. It was established that the notification applied to importers under VABAL License fulfilling export obligations without availing Modvat credit. As the appellant was not a VABAL License holder and did not export goods under the scheme, they did not breach the notification. The Tribunal concluded that the appellants did not violate the notification's conditions and were not eligible for the Amnesty Scheme.

Coercion by the Department for Payment of Interest:
The appellant contended that they were coerced by departmental officers to reverse Modvat credit, even though they were not obligated to do so. The department demanded payment under protest, despite the appellant's stance that the Amnesty Scheme did not apply to them. The Tribunal acknowledged the coercion by the department and ruled that the interest paid under compulsion should be refunded to the appellant.

Refund of Interest under Section 11BB of the Central Excise Act:
The appellant sought a refund of the amount paid under protest, arguing that the payment was not justified as they were not eligible for the Amnesty Scheme. Referring to Section 11BB of the Central Excise Act, the Tribunal held that the interest paid under coercion should be refunded to the appellant. Consequently, the appeal was allowed, and the impugned order was set aside in favor of the appellant.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal regarding the interpretation of the Amnesty Scheme, violation of Notification No. 203/92-Cus., coercion by the Department for interest payment, and the refund of interest under the Central Excise Act.