2006 (7) TMI 497 - Commissioner - Central Excise

Summary

Issues:
Review of dropping demand of interest under Section 11AB of the Central Excise Act.

Analysis:
The case involved a Review application arising from an Order-in-Original passed in the case of a company. The department had issued a Show Cause Notice to the company regarding the recovery of interest amount under Section 11AB of the Act. The Adjudicating Authority dropped the proceedings, citing that the differential duty had been paid before the issuance of the Show Cause Notice. The appellant contended that interest was mandatory to be paid after the enactment of the Finance Bill, 2001, and the duty was not paid by the due date as per Rule 8(3). The respondent argued that the case proceeding was rightly dropped based on facts and merits, and the Review order seemed prejudiced without proper legal references. The respondent also relied on case laws to support their stance, emphasizing that interest cannot be charged without the determination of duty.

The appellant further argued that no suppression or fraud was alleged, and the duty was paid correctly at the time of clearance of goods. They cited legal precedents where it was held that if the duty is paid before the issue of the Show Cause Notice, no penalty or interest is payable. The appellant highlighted that unforeseen circumstances beyond their control resulted in the non-payment of duty, and legal principles like "lex non cogit ad impossibilia" applied in their case. The Tribunal's decisions in various cases were referenced to support the argument that interest under Section 11AB cannot be demanded without suppression or fraud.

In the final analysis, the Review application by the Revenue was rejected as it lacked merit. The order passed by the lower authority dropping the demand of interest under Section 11AB was deemed correct and in accordance with the law. The judgment extensively discussed legal principles, case laws, and precedents to establish that the appellant was not liable to pay interest under Section 11AB due to the circumstances surrounding the payment of duty before the Show Cause Notice was issued.

This detailed analysis of the judgment showcases the legal intricacies involved in the Review application regarding the demand of interest under Section 11AB of the Central Excise Act. The judgment carefully considers the arguments presented by both parties, legal precedents, and relevant provisions of the law to arrive at a well-reasoned decision.