2007 (2) TMI 576 - AT - Central Excise

Interest on delayed payment of duty - Held that - the amendment of Chapter 15 came on 13-5-2005 with retrospective effect. Section 11AB(1) of the Central Excise Act, 1944, provides that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay duty, shall be liable to pay interest. In the present case, duty was levied with retrospective effect consequent upon amendment by Finance Bill, 2005 as enacted on 13-5-2005. So, there is no short levy or short payment of duty prior to 13-5-2005 - the respondent would not be liable to pay interest for the period 15-12-2004 to 31-1-2005 prior to amendment of Chapter Note as on 13-5-2005 - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against Order-in-Appeal No. IND-1/191/2006
- Liability to pay duty on clearances during a specific period
- Retrospective amendment of Chapter Note in Central Excise Tariff Act, 1985
- Payment of interest as duty levied retrospectively
- Interpretation of Section 11AB(1) of the Central Excise Act, 1944

Analysis:
The appeal was filed against Order-in-Appeal No. IND-1/191/2006, where the respondents were engaged in manufacturing "Refined Soya Bean Oil" falling under Heading 1503.00 of the Central Excise Tariff Act, 1985. The Hon'ble Supreme Court had previously held that the process of refining oil does not amount to manufacture. Following this decision, the respondents informed the department that they would not pay duty from a certain date. However, an amendment was made to Chapter 15 with retrospective effect, making certain activities amount to "manufacture." Consequently, the respondents became liable to pay duty on clearances during a specific period. The Original authority confirmed the duty demand, and the Commissioner (Appeals) held that interest was payable from the date of enactment of the Finance Act, 2005 until actual payment.

The learned D.R. argued that the amendment of Chapter 15 under the Finance Act, 2005, provided that no act or omission shall be punishable as an offense if it would not have been so punishable before the amendment. It was contended that interest payment is not an offense, and therefore, the respondent was liable to pay interest as duty was levied retrospectively. However, the Tribunal found that there was no short levy or short payment of duty before the retrospective amendment came into effect.

Considering the above, the Tribunal upheld the decision of the Commissioner (Appeals) that the respondent was not liable to pay interest for the period before the amendment of Chapter Note on 13-5-2005. Therefore, the appeal filed by the Revenue was rejected. The judgment clarified the interpretation of Section 11AB(1) of the Central Excise Act, 1944, in the context of retrospective amendments and duty payment obligations.