2010 (9) TMI 271 - AT - Central Excise

Interest remission of Cenvat credit on stolen inputs - duty paid before SCN - held that the interest is not payable as the entire amount of duly stands paid before issuance of Show Cause Notice when there is no intent to evade payment of duty - remand the matter to the original authority - Appeal is allowed by way of remand

Summary

Issues:
1. Remission of Cenvat credit on stolen inputs.
2. Rejection of remission sought by the Commissioner.
3. Show Cause Notice issued for denying credit.
4. Confirmation of demand and interest by the original authority.
5. Contesting interest demand.
6. Applicability of interest from the date of burglary.
7. Error in determining interest liability.
8. Setting aside orders and remanding the matter for determining interest liability.

Analysis:
1. The appeal concerns the remission of Cenvat credit on stolen inputs by the respondent following a burglary in their factory premises. The party claimed remission amounting to Rs. 3,28,326, which was rejected by the Commissioner.

2. Subsequently, a Show Cause Notice was issued seeking to deny the credit along with interest. The original authority confirmed the demand of Rs. 3,28,326 and demanded interest without specifying the date from which it should be calculated.

3. The jurisdictional authority claimed interest of Rs. 1,98,549 from the date of the burglary till the payment of the demanded duty. The Commissioner (Appeals) held that interest was not payable as the duty had been paid before the Show Cause Notice without any intent to evade payment.

4. The Deputy Commissioner's order did not indicate the date from which interest should be payable, leading to a dispute on the calculation of interest. The appellate authority noted that the interest liability determination was not in accordance with the provisions of the Central Excise Act.

5. The appellate tribunal set aside the orders of both lower authorities regarding interest and remanded the matter to the original authority for determining the interest liability after providing a reasonable opportunity for the party to be heard. The appeal was allowed by way of remand, and the cross-objection was also disposed of accordingly.