2009 (12) TMI 767 - AT - Central Excise

Liability of interest - whether u/s 11AA of the Act the appellant is liable to pay interest on the amount of duty paid on 25-1-2007 and if so to what extent? - Held that - the liability of assessee to pay interest on duty under the provisions of Sections 11AA and 11AB has been underlined by the Tribunal in Commissioner v. Orissa Concrete Products (India) Pvt. Ltd. 2000 (12) TMI 497 - CEGAT KOLKATA wherein it was held that interest on a confirmed demand of duty pending realization on 26-5-1995 was recoverable for the period after three months from such date till the date of realization of duty - appeal dismissed - decided against assessee.

Summary

Issues: Liability to pay interest under Section 11AA of the Act on duty paid after the enactment of the provision.

In this case, the appellant, engaged in the manufacture of steel castings, cleared a quantity of steel castings without duty payment under an exemption notification. Subsequently, duty was demanded, and a penalty was imposed for non-admissibility of the exemption. The appellant paid part of the duty in 1985 and the balance in 2007. The Department invoked Section 11AA for interest recovery on the unpaid duty amount. The main issue was whether the appellant is liable to pay interest under Section 11AA on the duty paid in 2007. The Tribunal analyzed the applicability of Section 11AA, which came into force in 1995 when the duty liability existed but was not fully paid until 2007. The Tribunal held that the appellant is liable to pay interest on the unpaid duty from 1995 to the date of payment in 2007, as per the proviso of Section 11AA.

The liability of the assessee to pay interest under Sections 11AA and 11AB was emphasized by the Supreme Court in Commissioner v. SKF India Ltd. and supported by the Tribunal's decision in Commissioner v. Orissa Concrete Products (India) Pvt. Ltd. The Orissa Concrete Products case established that interest on confirmed duty demands pending realization before 1995 was recoverable from three months after 1995 until the duty payment date. The Tribunal's decision in Orissa Concrete Products was cited as precedent, where interest was payable from 1995 until the duty payment in 1999. Similarly, in the present case, the Tribunal upheld the lower authorities' decision to sustain the interest payment liability on the unpaid duty amount from 1995 to the payment date in 2007.

Ultimately, the Tribunal dismissed the appeal, affirming the liability of the appellant to pay interest under Section 11AA on the duty amount paid after the provision's enactment. The decision was based on the established legal principles and precedents set by higher authorities and previous Tribunal rulings. The appellant's argument against interest payment prior to the Supreme Court's order was rejected, emphasizing the mandatory nature of interest payment under Section 11AA for delayed duty settlements.