2015 (9) TMI 1376 - AT - Central Excise

Demand of interest u/s 11AA - whether demand of interest under Section 11AA is sustainable or otherwise - Held that - Sub-Rule (3) of Rule 57I and Sub-Rule (8) of Rule 57U of CER clearly stipulates the recovery of interest where the appellant ails to pay amount determined within 3 months from the date of order the interest shall be payable as per Section 11AA of CEA. By virtue of the above provision of Rule 57(I) and Rule 57(U), Section 11AA is made applicable for demand of interest in recovery of modvat cases. - once the demand is confirmed and the same is upheld by the higher Appellate Forum the interest is automatic. The appellants having availed and utilized the credit for payment of excise duty which is due to the govt. interest is leviable for which no notice is required. - interest is payable on the amount already confirmed and upheld by the Tribunal which was belatedly paid only after the Tribunal s order. Accordingly, the impugned order is upheld - Decision in the case of CCE & C Aurangabad Vs Padmashri V.V.Patil S.S.K. Ltd. 2007 (7) TMI 6 - HIGH COURT, BOMBAY followed - Decided against assessee.

Summary

Issues:
- Appeal against Commissioner (Appeals) order regarding demand of interest under Section 11AA of the Central Excise Act.

Analysis:
1. The case involved an appeal where the Hon'ble High Court directed the Tribunal to hear the appeal on merits after setting aside the previous order due to COD clearance issues.
2. The appellant contested the demand of interest under Section 11AA related to availed modvat credit on inputs and capital goods during 1995-1999.
3. The Department issued a fresh SCN demanding interest on the amount already paid by the appellant, which was confirmed by the adjudicating authority and Commissioner (Appeals).
4. The appellant argued that interest cannot be demanded under Section 11AA as the recovery of irregular credit was made under CCR, not Section 11A, and cited relevant case laws.
5. The Respondent contended that non-payment of duty due to disallowed credit justifies invoking Section 11AA for interest recovery without a time limit.
6. The Tribunal found the demand of interest under Section 11AA sustainable as the recovery of irregular credit under CCR falls within the purview of Section 11AA as per Rule 57I and 57U of CER.
7. It was established that interest becomes automatic once the demand is confirmed and upheld by the higher Appellate Forum, without requiring a separate notice.
8. The clear and unambiguous language of Rule 57I (3) and 57U (8) of CER mandates the payment of interest after a specified period, leaving no discretion to the appellant.
9. The Tribunal referred to a High Court judgment emphasizing that interest under Section 11AA is a civil liability, compulsory for the assessee who retained government dues, irrespective of mala fide intent.
10. Following the legal precedents and the mandatory nature of interest payment under Section 11AA, the Tribunal upheld the demand for interest on the confirmed amount, paid belatedly after the Tribunal's order.

This detailed analysis of the legal judgment showcases the arguments presented by both parties, the application of relevant legal provisions, and the Tribunal's decision based on established legal principles and precedents.