2013 (10) TMI 617 - AT - Central Excise

MODVAT credit Determination of Duty under Rule 57-I - Appellant contended that there was no determination of the amount payable under Rule 57I (1)(iii) - the question of payment of interest does not arise Held that - Rule 57-I (1)(ii) envisages a situation where demand is to be raised by the department within six months or within five years as the case may and sub-rule (1)(iii) provides that the proper officer to determine the liability - Sub-rule (2) provides for a situation where a demand is made, the assessee pays with interest and the matter ends there. Whether the demand is confirmed after quantification under sub-rule (1)(iii) or the amount is paid under sub-rule (2), the assessee is required to pay interest as per the provisions of sub-rule (3) read with Section 11AA of the Act - Where an amount is determined under sub-rule (1)(iii) or the amount demanded has been paid under sub-rule (3), the interest is to be paid - even if the duty amount was paid, the provisions of sub-rules (1) & (3) of Rule 57I would be attracted - in earlier proceedings, the appellant had challenged the liability before the Tribunal and the Tribunal dismissed the appeal - The consideration of the statutory provisions reveals that once the duty amount is paid, the interest becomes payable and whether duty is determined under Rule 57-I (iii) or it is paid under Rule 57I (2), the interest liability would be attracted Decided against Assessee.

Summary

Issues:
1. Challenge of MODVAT credit utilization without proper declaration.
2. Determination of amount payable under Rule 57-I (1)(iii) and liability for interest payment.

Issue 1: Challenge of MODVAT credit utilization without proper declaration

The appellant challenged the demand raised by the department for reversing MODVAT credit of Rs. 14,81,635/-, which was taken without following the required declaration during the period 1987 to 1988. The Tribunal in Order No. 471/1990 dated 6.6.1990 dismissed the appeal filed by the appellant, confirming the liability. The appellant paid the demanded amount in 1999 but did not pay the interest. Subsequently, proceedings were initiated for the payment of interest for the delay in payment by the appellant.

Issue 2: Determination of amount payable under Rule 57-I (1)(iii) and liability for interest payment

The appellant contended that there was no determination of the amount payable under Rule 57-I (1)(iii), hence questioning the liability for interest payment. The Tribunal analyzed the relevant statutory provisions, specifically Rule 57-I (1)(iii), which requires the proper officer to determine the amount of credit to be disallowed. Subsequently, if the amount is not paid within three months of the demand notice, interest is applicable as per Rule 57-I (3).

The Tribunal clarified that whether the duty amount is determined under Rule 57-I (1)(iii) or paid under Rule 57-I (2), interest liability is triggered. The appellant's challenge before the Tribunal had already been dismissed, confirming the liability. Therefore, the Tribunal concluded that the appellant is required to pay interest as per the provisions of Rule 57-I (3) read with Section 11AA of the Act, regardless of the duty payment status. Consequently, the appeal filed by the appellant was deemed to have no merit and was rejected.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Bangalore highlights the issues surrounding the challenge of MODVAT credit utilization without proper declaration and the determination of the amount payable under Rule 57-I (1)(iii) along with the liability for interest payment.