2013 (12) TMI 1558 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the denial of MODVAT credit, imposition of penalties, demand for interest, interpretation of Rule 57-I, and the liability to pay interest on wrongly availed credit.

Denial of MODVAT credit and penalties:
A show-cause notice was issued to deny MODVAT credit u/s Rule 57-I, leading to penalties being imposed. The Commissioner (Appeals) set aside the order, but the Tribunal allowed the department's appeal, resulting in the appellant paying the amount wrongly availed. A subsequent show-cause notice demanded interest, which was confirmed by lower authorities. However, the Tribunal, in an earlier order, held that no interest was payable due to the timing of the show-cause notice and the introduction of interest liability in the statute.

Demand for interest and Rule 57-I interpretation:
The Revenue filed for rectification, citing a mistake in the earlier order regarding the effective date of interest liability under Rule 57-I. The Tribunal considered the appellant's lack of seriousness in pursuing the appeal and the history of adjournments. The learned A.R. argued that interest payment was mandatory under Rule 57-I(3) and Section 11AA, despite no explicit mention in the original adjudication or show-cause notice. The difference in wording between Section 11AA and Rule 57-I was highlighted to support the obligation to pay interest once the amount is determined.

Interpretation of relevant provisions and case law:
The Tribunal examined the provisions of Section 11AA and Rule 57-I, emphasizing the mandatory nature of interest payment as per the latter. The appellant's reliance on a previous decision was dismissed, as the show-cause notice in this case postdated the amendment to Rule 57-I. The judgment concluded that the appeal lacked merit, and it was rejected accordingly.

(Order dictated and pronounced in open court)