2011 (12) TMI 196 - HC - Central Excise

Whether mere mention of wrong provision of law (Section 11AC) in the show cause notice takes away the power to levy/realise interest u/s 11AB Held that - Factum of charging of interest was already there in the show cause notice. Instead of mentioning Section 11AB he has mentioned Section 11AC. It did not affect the contents of notice as it is well established that mere quoting of a wrong provision would not invalidate the notice, if the proposed action can be justified under any statutory provision. Since, matter has been remanded by the Tribunal and the entire controversy is at large before the Commissioner is concerned. Thus, order of Tribunal is set aside and it is directed to Tribunal to decide the appeal afresh in accordance with law in the light of the observation made above. We may mention here that we have not expressed any opinion on the question as to whether charging of interest under Section 11AB is automatic or not as we find that the issue is yet to be gone into by the Commissioner of Central Excise.

Summary

Issues:
1. Interpretation of provisions of Central Excise Act regarding the levy of interest.
2. Effect of mentioning the wrong provision in a show cause notice on the validity of the notice.

Analysis:
1. The case involved an appeal under Section 35G of the Central Excise Act against an order passed by the Custom Excise and Service Tax Appellate Tribunal. The substantial questions of law revolved around the levy of interest under Section 11AB of the Act and whether the mention of a wrong provision in the show cause notice affected the power to levy interest. The respondent, engaged in the manufacture of sugar, had filed an application for condonation of Central Excise duty, which was rejected by the Commissioner. The Tribunal dismissed the Revenue's appeal due to the absence of invoking Section 11AB in the show cause notice.

2. The appellant contended that the mention of the wrong provision, Section 11-AC instead of Section 11-AB, in the show cause notice did not invalidate the notice as the fact of charging interest was already present. The court referred to various decisions to support the principle that quoting a wrong provision does not affect the validity of the notice if the proposed action is justifiable under any statutory provision. The court highlighted that the matter of charging interest was raised in the notice, and the error in mentioning the specific section did not nullify the notice.

3. The respondent argued that the entire matter was remanded by the Tribunal for fresh adjudication, making the Revenue's appeal infructuous. However, the court clarified that as long as the Tribunal's order stood, the Commissioner could not adjudicate on the levy of interest. Therefore, the court set aside the Tribunal's order and directed a fresh decision on the Revenue's appeal, emphasizing that the issue of automatic levy of interest under Section 11AB was yet to be examined by the Commissioner.

4. Ultimately, the court allowed the appeal, concluding that the Tribunal needed to reevaluate the Revenue's appeal in light of the observations made. The court refrained from expressing an opinion on the automatic nature of interest under Section 11AB, leaving the matter for the Commissioner's consideration during the fresh adjudication process.