2013 (12) TMI 1492 - HC - Central Excise

Summary

Issues involved: Determination of liability to pay Central Excise duty and interest u/s 11AB of the Central Excise Act, 1944.

Summary:

Issue 1: Liability to pay Central Excise duty and interest
The respondent was engaged in cotton yarn production and was liable to pay Central Excise duty for the period from September 2001 to February 2002. A show cause notice was issued, demanding duty and interest u/s 11AB. The Order-in-Original confirmed the interest demand, which was challenged by the respondent in Appeal No. E/1057/2004 before the Appellate Tribunal. The Tribunal set aside the interest demand, leading to the present Civil Miscellaneous Appeal by the Commissioner of Central Excise.

Issue 2: Interpretation of Section 11AB of the Central Excise Act
The key question was whether the respondent was liable to pay interest u/s 11AB for belated payment of Central Excise duty. The appellant argued that despite the duty being paid late, interest was still applicable as per the Act. The respondent contended that interest could only be levied if the quantum of tax was quantified in the show cause notice.

Court's Decision:
The Court analyzed Section 11AB, which allows for interest on belated payment of duty. Despite the respondent admitting to late payment of tax, the Tribunal had erroneously set aside the interest demand. Referring to a Supreme Court decision, the Court emphasized that interest is leviable on delayed payment of duty regardless of the reason. Therefore, the Court allowed the appeal, setting aside the Tribunal's order and ruling in favor of the appellant's right to levy interest on the Central Excise duty for the mentioned period.

In conclusion, the Civil Miscellaneous Appeal was allowed without costs, the Tribunal's order was set aside, and the appellant was granted the authority to impose the appropriate rate of interest on the Central Excise duty from September 2001 to February 2002.