2006 (3) TMI 590 - AT - Central Excise

Summary

Issues:
1. Claim for interest on delayed payment of abatement amount under Section 3A of the Central Excise Act.
2. Applicability of interest provisions on refunds under compounded levy scheme.
3. Interpretation of interest payments limited to refund of duty only.

Analysis:
1. The appellant discharged duty liability under Section 3A of the Central Excise Act, where duty is deposited in advance based on production capacity. The appellant claimed interest on delayed payment of abatement amount allowed due to delay in payment. The Commissioner rejected the claim, citing interest payable only on refunds under Section 11B. The appellant argued that interest should be granted as it is a refund of duty, supported by Tribunal decisions and Circular No. 130/41/95-CX mentioning refunds of advance deposits and compounded levy scheme payments. The Tribunal agreed, stating that interest is attracted to refunds resulting from abatement claims, overturning the impugned order and directing the revenue to pay interest for the delay.

2. The contention raised was whether interest provisions apply to refunds under the compounded levy scheme. The appellant argued that payments under this scheme are excise duty payments, making refunds on abatement claims also refunds of the duty paid. The Tribunal concurred, stating that interest is attracted to refunds from abatement claims, even under a narrow interpretation of interest provisions. The impugned order's distinction was deemed invalid, and interest was deemed rightfully due to the appellant, resulting in the order being set aside and the revenue directed to pay interest for the delay.

3. The interpretation of the interest provision was challenged, with the DR contending that interest payments are limited to refunds of duty only, not other cases like abatement claims. However, the Tribunal found merit in the appellant's argument that refunds from abatement claims are essentially refunds of the duty originally paid under the compounded levy scheme. Therefore, interest was deemed applicable to such refunds, and the impugned order was overturned, directing the revenue to pay interest for the delay in refunding the abatement amount.