2011 (4) TMI 136 - AT - Central Excise

Recovery of interest u/s 11AB - proviso to Section 11AB state that in the event of payment of duty within 45 days from the date of issue of an order, instruction or direction by the Board under Section 37B that interest liability will not arise - payment of duty is not in terms of an order or instruction or direction issued by the Board Hence , interest liability will arise subsequent - The appeal is partly allowed by holding that the assessee is liable to pay interest w.e.f. 11.5.2011.

Summary

Issues:
1. Liability of interest under Section 11AB of the Central Excise Act, 1944 for the period in dispute.
2. Interpretation of the proviso to Section 11AB regarding the timeline for payment of duty to avoid interest liability.

Analysis:
1. The judgment dealt with the issue of the liability of interest under Section 11AB of the Central Excise Act, 1944 for the period in dispute, which was from March 2001 to March 2002. The adjudicating authority had confirmed a demand against the appellants and ordered the recovery of interest. The appellants challenged only the levy of interest, not the duty liability. The Commissioner (Appeals) accepted the contention of the assessee that since they paid the duty within 45 days of the adjudication order, interest was not leviable as per the language of Section 11AB. The Revenue appealed against this decision. The argument revolved around the timing of payment concerning the provisions of Section 37B of the Act.

2. The interpretation of the proviso to Section 11AB was crucial in determining the timeline for payment of duty to avoid interest liability. The Revenue contended that duty must be paid within 45 days of an order, instruction, or direction under Section 37B to avoid interest liability. The appellants argued that even payment within 45 days from the date of the adjudication order should exempt them from interest liability, citing a circular by the Board. The Tribunal analyzed the language of the proviso to Section 11AB and concluded that interest liability would not arise unless duty was paid within 45 days from the date of an order, instruction, or direction by the Board under Section 37B. Since the payment in this case was not based on such an order or direction, interest liability was upheld from a specific date. The judgment partially allowed the appeal, holding the assessee liable to pay interest from a particular date.

This detailed analysis of the judgment highlights the issues of interest liability under Section 11AB of the Central Excise Act, 1944 and the interpretation of the proviso to determine the timeline for payment to avoid interest liability.