2008 (9) TMI 813 - AT - Central Excise

Summary

Issues: Application for waiver of pre-deposit of interest amount under Section 11AB of the Central Excise Act.

In this case, the applicant filed an application seeking waiver of pre-deposit of interest amounting to Rs. 88,226 under Section 11AB of the Central Excise Act. The adjudicating authority initially dropped the proceedings, but on appeal by the revenue, the Commissioner (Appeals) upheld the demand for interest. The revenue contended that the applicants were clearing inputs as such on reversal of equal Cenvat credit on the last day of the month, arguing that the reversal of Cenvat credit should be on a consignment basis, not on the last day of the month, as allowed for manufactured goods. On the other hand, the applicant argued that interest could only be charged from the first day of the month succeeding the month in which duty ought to have been paid, emphasizing that since duty was paid by reversing the credit at the end of each month, there was no default at the end of each month, making the demand for interest unsustainable.

The Tribunal, in its analysis, focused on the provisions of Section 11AB of the Act, which stipulate that interest shall be charged from the first day of the month succeeding the month in which duty ought to have been paid. Considering that in the present case, duty was paid at the end of each month by reversing the credit, the Tribunal found that the applicant had a strong case in their favor. Therefore, the Tribunal concluded that the demand for interest was not sustainable, and as a result, the pre-deposit of the entire interest amount was waived. The Tribunal granted the stay petition, allowing the applicant relief from the obligation to make the pre-deposit.