2011 (7) TMI 436 - AT - Central Excise

Attachment of property - Customs (Attachment of property of defaulters for recovery of Customs Dues) Rules, 1995, as made applicable to the central excise - held that - SCN had been issued for recovery of interest - before issue of these notices to the respondent, neither any notice had been issued nor any order has been passed. Notice under Section 142(1)(C ) can be issued for in respect of the sums, which are due to the Government and which are not being paid by the assessee. In this case, these two notices dated 7.1.2005 and 27.01.2005 had been issued for recovery of sums representing interests for the period of delay in reversal of the Cenvat credit in respect of the inputs which had been cleared as such. In our view, before issue of these notices under Section 142 (1)(C )(ii) of Customs At, 1962 at least some orders quantifying the interest due should have been communicated to the respondent which has not been done in this case. The issue of notices dated 7.1.2005 and 27.01.2005 under Section 142 (1) (C ) (ii) of the Customs Act, 1962 to the respondent are, therefore, pre-mature and hence, we, therefore, do not find any infirmity in the impugned order.

Summary

Issues:
- Validity of recovery notices issued under Section 142(1)(C)(ii) of Customs Act, 1962
- Requirement of show cause notice and adjudication order for recovery of interest
- Interpretation of the law regarding recovery of interest due to the Central Government
- Whether the notices issued were premature

Analysis:

The case involved the validity of recovery notices issued by the Dy. Commissioner of Central Excise under Section 142(1)(C)(ii) of the Customs Act, 1962 for the recovery of central excise duty and interest. The respondent had appealed to the Commissioner (Appeals) arguing that no demands had been confirmed through show cause notices or adjudication orders. The Commissioner (Appeals) allowed the appeals, stating that the notices were not maintainable. The department then filed appeals against this decision.

During the proceedings, the Departmental Representative argued that the interest amounts mentioned in the notices were chargeable for delays in the reversal of Cenvat credit, and no separate show cause notice or adjudication order was required for the recovery of interest. Referring to legal precedents, it was contended that the notices for interest recovery were rightly issued under the relevant provisions of the law. The Departmental Representative challenged the Commissioner (Appeals)' decision, claiming that the notices were not non-speaking orders.

Upon careful consideration of the submissions and records, the Tribunal found that the notices issued for the recovery of interest were premature and lacked the necessary quantification of interest due. It was observed that before issuing such notices under Section 142(1)(C)(ii) of the Customs Act, some orders quantifying the interest should have been communicated to the respondent, which had not been done in this case. Therefore, the Tribunal concluded that the notices were premature and upheld the decision of the Commissioner (Appeals) to dismiss the Revenue's appeal.

In summary, the Tribunal determined that the recovery notices issued under Section 142(1)(C)(ii) of the Customs Act, 1962 were premature due to the absence of quantification of interest amounts. The legal requirement for issuing show cause notices and passing adjudication orders for interest recovery was emphasized, leading to the dismissal of the Revenue's appeal.