2015 (3) TMI 1099 - AT - Central Excise

Demand of interest - Section 11AB - Clandestine removal of goods - The adjudicating authority in his order dated 14.6.2005 has clearly discussed the applicability of interest and also rightly confirmed the demand of interest under section 11AB on the demand already paid by the respondents - Held that - I find that the Commissioner (Appeals) has set aside the interest under section 11AB by relying on the decisions of the Hon ble High Court and the Hon ble Supreme Court which were pertaining prior to amendment of Section 11AB whereas the present case is covered under the amended provisions of Section 11AB which came into effect from 11.5.2001. The Hon ble Supreme Court in the case of CCE, Pune Vs. SKF Ltd. (2009 (7) TMI 6 - SUPREME COURT ) has held that interest is payable under Section 11AB. - Decided in favour of Revenue.

Summary

Issues:
Appeal against setting aside of interest under Section 11AB of the Act.

Analysis:
The case involved an appeal by Revenue against the setting aside of interest under Section 11AB of the Act by the Commissioner (Appeals). The respondents were manufacturers of MS ingots and were charged with clandestine removal of finished goods without duty payment. The adjudicating authority confirmed a demand of &8377;19,34,306 and imposed a penalty of &8377;10,000 along with interest under Section 11AB. The respondents appealed against the penalty and interest imposition, and the Commissioner (Appeals) set aside both. The Revenue appealed specifically against the interest setting aside.

The Revenue argued that interest under Section 11AB is mandatory once duty is confirmed, regardless of when duty payment was made. The respondents contended that they paid the duty before the show-cause notice, hence no penalty or interest should apply. The Tribunal noted that the case involved the demand of interest under Section 11AB, confirmed by the adjudicating authority. The investigating authorities established clandestine removal, and duty was paid by the respondents between 2003 and 2005. The Commissioner (Appeals) set aside the interest, citing pre-amendment court decisions, but the Tribunal held that the amended Section 11AB, effective from 2001, mandates interest payment upon duty confirmation.

The Tribunal referenced a Supreme Court case to support the applicability of interest under Section 11AB, emphasizing that interest is leviable on delayed or deferred duty payment. The Tribunal concluded that interest is payable under Section 11AB, setting aside the Commissioner (Appeals) order and allowing the Revenue's appeal.

In conclusion, the Tribunal upheld the mandatory nature of interest under Section 11AB upon duty confirmation, following the amended provisions effective from 2001. The decision aligned with the Supreme Court's interpretation, emphasizing the obligation to pay interest on delayed duty payments, thereby allowing the Revenue's appeal against the interest setting aside by the Commissioner (Appeals).