2006 (4) TMI 362 - AT - Central Excise

Summary

Issues:
Interest chargeable on delayed payments of additional duties of excise on Tea and Tea Waste.

Analysis:
The appeals were filed by the Revenue against the Order-in-Appeal regarding the interest chargeable on delayed payments of additional duties of excise on Tea and Tea Waste. The respondents voluntarily discharged their liability for additional duty of excise, but the Department sought to recover interest from them under Rule 8 of the Central Excise Rules, 2002. The adjudicating authority confirmed the recovery of interest, which was set aside by the Commissioner (Appeals), leading to the appeals by the Revenue.

The main contention was whether interest is chargeable under Rule 8 of the Central Excise Rules, 2002. The J.D.R. argued that since the respondents availed benefits for payments of additional duty of excise as per Rule 8, interest is leviable. On the other hand, the Senior Advocate for the respondent companies pointed out that Section 157 of the Finance Act, 2003 does not specifically mention the recovery of interest for delayed payment of additional duty of excise. He relied on Supreme Court decisions to support his argument.

Upon considering the submissions and perusing the records, it was found that the respondents were required to discharge additional duties of excise on Tea and Tea Waste under Section 157 of the Finance Act, 2003. This section did not provide for the recovery of interest from violators. Referring to a Supreme Court decision, it was established that when the breach of provisions is penal in nature, a clear authority of law is required for imposition. As the Act created liability for additional duty of excise but not for any penalty, the confiscation proceedings against the respondents were deemed unwarranted.

The provisions of sub-section 3 of the Additional Duties (Goods of Special Importance) Act, 1957 were found to be identical to the wording of sub-section 3 of Section 157 of the Finance Act, 2003. Therefore, the ratio of the Supreme Court's decision in a relevant case was applied to dismiss the appeals filed by the Revenue. The judgment was pronounced and dictated in open court, upholding the decision to not charge interest on the delayed payments of additional duties of excise on Tea and Tea Waste.