2015 (10) TMI 1155 - AT - Central Excise

Demand of interest on differential duty - Whether the appellant is required to pay interest in a case where duty alongwith part interest was paid voluntarily - Held that - Issue is confined to demand of interest under Section 11AB. As it is admitted fact that there is substantial delay in payment of duty even though appellant has paid interest voluntarily. I am of the view that even though the duty was not determined under subsection (2) of Section 11A but when there admitted delay in payment of duty, interest provisions was made under Section 11AB and even prior to 11/5/2001 interest is chargeable on the delayed part of payment of duty. In the judgment of Hon ble Supreme Court in the case of International Auto Ltd it becomes clear that interest is levied for loss of Revenue on any count. In view of the said decision interest was correctly demanded by the Adjudicating authority and upheld by the Ld. Commissioner (Appeals). Therefore I do not find any infirmity in the impugned order therefore the same is sustained - Decided against assessee.

Summary

Issues involved: Whether interest is payable on voluntarily paid differential duty even if duty was not determined under subsection (2) of Section 11A.

Analysis:
1. Issue of Interest Payment: The appeal questioned the requirement of interest payment by the appellant on the voluntarily paid differential duty. The appellant argued that interest cannot be demanded unless duty is determined under subsection (2) of Section 11A. They contended that since the duty was paid voluntarily and not determined under subsection (2) of Section 11A, interest under Section 11AB should not be applicable. The appellant relied on judgments like Commissioner vs. T.V.S. Whirlpool ltd. and EMCO Ltd. vs. Commissioner of C. Ex, Mumbai to support their argument.

2. Arguments by Appellant: The appellant's consultant reiterated that interest should not be charged if duty is voluntarily discharged and not determined under Section 11A(2). They emphasized that prior to 11/5/2001, interest was not payable in such cases. The appellant's stance was that the duty was paid voluntarily, and therefore, interest should not be levied.

3. Revenue's Position: The Assistant Commissioner representing the Revenue contended that interest is chargeable on delayed duty payment under any circumstances. He cited judgments like Alstom T & D India Ltd. vs. CESTAT, Chennai and Hindustan Insecticides Ltd. vs. Commr. of C.Ex & Service Tax (LTU) to support the claim that interest is inevitably charged in cases of delayed duty payment.

4. Judgment: The Tribunal examined both parties' submissions and the records. It was acknowledged that there was a significant delay in duty payment, even though the appellant voluntarily paid interest. The Tribunal held that interest provisions under Section 11AB apply when there is an admitted delay in duty payment, regardless of whether duty was determined under Section 11A(2). Referring to the Supreme Court's decision in the case of International Auto Ltd., the Tribunal affirmed that interest is imposed to compensate for revenue loss. Consequently, the Tribunal upheld the demand for interest made by the Adjudicating authority, as supported by the Commissioner (Appeals), dismissing the appellant's appeal.

This detailed analysis outlines the core issue of interest payment on voluntarily paid differential duty, the arguments presented by both sides, and the Tribunal's decision based on legal precedents and the interpretation of relevant statutory provisions.