2010 (11) TMI 436 - HC - Central Excise

Application for stay of demand of interest - fixation of the assessment under Rule 7(4) of the Central Excise Rules 2002 - In the present case dispute is in respect of payment of interest on the amount of excise duty in respect of electrical equipments supplied by the petitioner to the Indian Railways - At the time when the equipments were manufactured and dispatched from the factory premises of the petitioner the price of such equipments was not ascertained and on the basis of provisional price the excise duty was paid - At present the only question for consideration before this Court is whether the petitioner is entitled for stay/exemption from deposit of the amount of excise which is in fact an amount of interest payable on the excise duty for maintainability of the appeal before the Tribunal - Held that prima facie a case has been made out by the petitioner for grant of stay in respect of recovery of interest from the petitioner on account of finalization of the assessment under Rule 7(4) of the Central Excise Rules 2002 - This petition stands disposed of

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal regarding interest demand on excise duty under Rule 7(4) of Central Excise Rules 2002.

Detailed Analysis:

1. Background of the Case:
The petitioner, a government organization, supplied electrical equipment to Indian Railways. A dispute arose regarding the payment of interest on excise duty for the equipment supplied.

2. Petitioner's Argument:
The petitioner contended that the excise duty was paid promptly after the price of the equipment was finalized by Indian Railways. They argued that interest under Rule 7(4) of the Central Excise Rules is only applicable if the duty is not paid within 30 days of demand.

3. Respondent's Argument:
The respondent, opposing the petitioner's claim, argued that the interest on excise duty is payable as per Section 11A(2)(b) of the Excise Act and is recoverable from the petitioner.

4. Court's Decision:
The High Court, after considering the arguments of both parties, found that a prima facie case existed for granting a stay on the recovery of interest from the petitioner. The Court directed the petitioner to deposit 25% of the due amount within 30 days and instructed the Tribunal to expedite the hearing and decision-making process within 90 days.

5. Conclusion:
The petition was disposed of with no order as to costs, emphasizing the need for a fair and expeditious resolution of the matter before the Tribunal. The Court refrained from commenting on the merits of the case, leaving the final decision to the Tribunal after a thorough hearing.

This detailed analysis highlights the key arguments presented by both parties, the legal provisions invoked, and the High Court's directive to address the issue of interest demand on excise duty in a timely and just manner.