2014 (9) TMI 1033 - AT - Central Excise

Interest on a short levy under Section 11AB of the Central Excise Act, 1944 - short levy - invocation of extended period - Held that - In the present proceedings the period of demand is prior to 11-5-2001, therefore, it has to be examined whether interest is demandable from the appellant in the light of unamended Section 11AB as it existed prior to 11-5-2001. It is observed from the unamended Section 11AB that the same was applicable to cases of short levy or non-levy etc., by reason of fraud, collusion or wilful misstatement or suppression of facts or contravention of any provision of Central Excise Act or Rules with intent to evade payment of duty. It is the case of the Revenue that extended period is invokable once the disputed amount has been paid whereas appellant is of the view that it is not a case of invocation of extended period as no penalty under Section 11AC of the Central Excise Act, 1944 has been imposed upon the appellant by the adjudicating authority in the remand proceedings. No penalty under Section 11AC of the Central Excise Act, 1944 has been imposed upon the appellant, therefore, it has to be held that elements of fraud, suppression or mis-statement etc., with intention to evade duty are, not available as appellant on their own paid the differential duty and intimated the Department. First appellate authority in Para-10 of OIA dated 9-11-2009, issued on 19-11-2009, has thus incorrectly mentioned that differential duty was paid by the appellant on being pointed out by the Department. As the elements of fraud, suppression & wilful misstatement etc., with intention to evade duty, are missing in these proceedings, therefore, demand of interest in the present proceedings is not sustainable against the appellant under Section 11AB of the Central Excise Act, 1944 as it existed in view of the case laws relied upon by the appellant. This Bench has not gone into the time barred nature of demand as on merits the issue stands decided in favour of the appellant.

Summary

Issues involved: Whether interest is payable on a short levy for the period 1998-1999 and 1999-2000 under Section 11AB of the Central Excise Act, 1944 when the short levy was voluntarily paid by the appellant without being pointed out by the Revenue.

Analysis:
1. The appellant argued that the interest, if any, can only be demanded under the unamended Section 11AB of the Central Excise Act, 1944, which required elements of fraud, misstatement, suppression, etc., with the intention to evade duty. They contended that no mandatory penalty was imposed, and the demand for interest was time-barred.

2. The Revenue contended that interest is payable even for periods before 11-5-2001 based on a Larger Bench judgment. They argued that the extended period is applicable in this case, citing relevant case laws.

3. The Tribunal noted that the disputed duty was from a period when the unamended Section 11AB was in force. The amended Section 11AB, effective from 11-5-2001, does not apply to cases where duty was payable before the amendment. The Tribunal referred to a High Court judgment to support that interest for the period before 11-5-2001 can only be recovered under the unamended Section 11AB.

4. The case records showed that no penalty under Section 11AC was imposed on the appellant. As there were no elements of fraud or suppression, the demand for interest under Section 11AB was deemed unsustainable. The Tribunal held that the demand for interest was not valid based on the arguments presented and case laws cited by the appellant.

5. Consequently, the Tribunal allowed the appeal filed by the appellant, ruling in their favor based on the observations made during the proceedings.