2012 (9) TMI 598 - HC - Central Excise

Interest on delayed payment of excise duty Held that - Non-issue of a demand notice under sub-section (1) of section 11A is nothing to do with leviability of interest for delayed payment - interest is leviable on the differential duty paid in pursuance of a subsequent invoice as the proper duty payable under the law had not been paid on the date of clearance - assessee is liable to pay interest

Summary

Issues:
1. Challenge to order passed by Tribunal regarding payment of interest on delayed excise duty.
2. Interpretation of Section 11A and Section 11AB of the Central Excise Act.
3. Reconsideration of penalty imposition by the Tribunal.

Analysis:
1. The High Court heard an appeal challenging the Tribunal's order stating that an assessee is not liable to pay interest on delayed excise duty if duty was paid before the show cause notice was issued, based on a previous judgment. The Revenue appealed to the Apex Court citing the Union of India v. Rajasthan Spinning & Weaving Mills case, which clarified that interest is still applicable even if duty is paid before notice. Following this, the High Court set aside the previous judgment and remanded the case to the Tribunal for a fresh review.

2. The High Court referred to the law laid down by the Apex Court and its own judgment in a previous case to explain the leviability of interest on delayed or deferred payment of duty. It highlighted that Sub-section (2B) of Section 11A allows the assessee to pay unpaid duty before notice issuance, but such payment does not exempt them from interest under Section 11AB. The court emphasized that interest is charged for revenue loss, even if the non-payment was unintentional, and it is applicable to correct the value of goods at the time of removal.

3. The High Court overturned the Tribunal's decision regarding interest payment, emphasizing that interest is indeed payable as demanded by the Revenue. However, the Court noted that the Tribunal did not address the imposition of penalty. Therefore, it directed the Tribunal to reconsider the penalty imposition issue. Consequently, the Court partially allowed the appeal, reversing the finding that no interest was payable, and remanded the penalty decision back to the Tribunal for fresh consideration.