2006 (2) TMI 525 - AT - Central Excise

Summary

Issues:
1. Levy of interest on duty under Section 11AB for the period from 11-5-2001.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Chennai involved a dispute regarding the levy of interest on duty under Section 11AB for the period from 11-5-2001. The original authority confirmed a demand of differential duty against the respondents, but dropped the proposals for interest and penalty due to prior payment of duty. The Department appealed against the non-levy of interest, arguing that interest should be imposed from 11-5-2001 based on Section 11A(2B) of the Central Excise Act. The Revenue contended that amendments to Section 11AA post-11-5-2001 made previous decisions inapplicable, citing the Supreme Court's ruling in Collector v. Alnoori Tobacco Products.

The respondents' counsel argued that invoking Section 11A(2B) exceeded the show cause notice's scope, referencing the Supreme Court's decision in Saci Allied Products Ltd. v. Commissioner. After considering the submissions, the Tribunal focused on whether interest under Section 11AB was applicable to duty paid by the respondents post-11-5-2001. Previous case laws like Ashok Leyland Ltd. v. Commissioner were cited, indicating that interest was not leviable if duty was paid before the show cause notice. The Tribunal noted that the duty payment period in the present case was from April 1998 to February 2003, with no insistence on interest for the pre-11-5-2001 period. The Tribunal highlighted Section 11A(2B) and Explanation 2, clarifying that interest was payable on duty paid under this subsection.

Consequently, the Tribunal allowed the Revenue's appeal regarding interest on duty paid post-11-5-2001, setting aside the previous decision and instructing the original authority to demand the correct interest amount from the respondents. The judgment was pronounced on 13-2-2006 by Shri P.G. Chacko, J., at the Appellate Tribunal CESTAT, Chennai.