2009 (8) TMI 921 - AT - Central Excise

Summary

Issues:
1. Appropriation of payment towards demand of duty under Section 11A and interest under Section 11AA.
2. Quantification of interest by the Jurisdictional Superintendent of Central Excise.
3. Application of Sections 11AA and 11AB for different periods.
4. Inconsistencies in invoking Section 11AA and determination of duty under Section 11A.

Analysis:
1. The appellant had paid the correct amount of duty long before the show-cause notice was issued. The Commissioner appropriated this payment towards the demand of duty under Section 11A and also demanded interest under Section 11AA. The demand pertained to a specific period, and the appellant sought stay of recovery of interest and waiver of pre-deposit based on subsequent quantification by the Superintendent.

2. The Superintendent quantified interest at different rates for distinct periods, applying Section 11AA until a certain date and Section 11AB thereafter. However, the Commissioner's omnibus application of Section 11AA for the entire period led to inherent contradictions. The appellant argued against the applicability of Section 11AA due to the absence of a duty determination under Section 11A at the time of payment.

3. The Tribunal observed that Section 11AA ceased to operate beyond a specific date when Section 11AB became effective. Despite this, the Commissioner's order predominantly relied on Section 11AA, which was not applicable for a substantial part of the dispute. The invocation of Section 11AA despite its limited applicability raised concerns about the consistency and legality of the proceedings.

4. Considering the inconsistencies and the appellant's argument regarding the non-applicability of Section 11AA, the Tribunal granted waiver of pre-deposit and stayed the recovery as requested. The decision was based on the grounds of procedural irregularities and the lack of a valid determination of duty under Section 11A during the relevant period.