2015 (4) TMI 164 - CGOVT - Central Excise

Interest demand on erroneously sanctioned rebate claim - Held that - As per section 11AA, the person who is liable to pay duty shall in addition to the duty be liable to pay interest at the rate specified in sub-section (2). These statutory provisions are quite clear and interest is payable automatically. The respondent has already accepted their interest liability. As such, Government orders that in this case interest is payable in terms of section 11AA of Central Excise Act, 1944. - Decided in favour of Revenue.

Summary

Issues:
1. Appeal against orders-in-appeal regarding rebate claims.
2. Excess cash refunds granted erroneously.
3. Applicability of Section 37B and Section 11AA of the Central Excise Act, 1944.
4. Repayment of excess rebate and interest liability.
5. Government's decision on interest payment under Section 11AA.

Issue 1: Appeal against orders-in-appeal regarding rebate claims
The revision applications were filed against orders-in-appeal regarding rebate claims submitted by the exporter. The Assistant Commissioner had sanctioned the rebate claims under Notification No. 19/2004-CX (NT) as the conditions were fulfilled and no unjust enrichment was found. However, appeals were filed against these orders on the grounds that the exporter had paid Central Excise duty based on CIF value instead of FOB value, and excess cash refunds were granted erroneously.

Issue 2: Excess cash refunds granted erroneously
The Commissioner (Appeals) allowed the Departmental appeal and directed the exporter to repay the excess rebate voluntarily within a specified time frame to avoid interest liability under Section 11AA of the Central Excise Act, 1944. The exporter complied with this directive and repaid the excess amounts within the stipulated time period.

Issue 3: Applicability of Section 37B and Section 11AA
The Department contended that Section 37B, which deals with uniformity in classification of excisable goods and levy of excise duties, was erroneously invoked by the Appellate Authority. Additionally, it was argued that the Commissioner (Appeals) failed to consider Section 11AA, which imposes interest liability on the person liable to pay duty, irrespective of whether the payment is voluntary or not.

Issue 4: Repayment of excess rebate and interest liability
During the proceedings, the respondent party confirmed the repayment of the excess rebate amount and expressed readiness to pay the interest as well. The Government carefully reviewed the case records, submissions, and orders-in-original and orders-in-appeal. It was noted that the respondent had acknowledged their interest liability under Section 11AA, and the Government concluded that interest was payable automatically as per the statutory provisions.

Issue 5: Government's decision on interest payment under Section 11AA
After thorough consideration, the Government ordered that interest is payable in accordance with Section 11AA of the Central Excise Act, 1944. The impugned order-in-appeal was modified to reflect this decision, and the revision application succeeded on this basis.

Conclusion:
The judgment addressed the issues related to rebate claims, erroneous cash refunds, the applicability of statutory provisions, repayment of excess amounts, and interest liability under Section 11AA. The Government's decision emphasized the automatic nature of interest payment as per the law, highlighting the importance of compliance with statutory provisions in excise matters.