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2016 (1) TMI 694 - AT - Central ExciseDemand of interest - appellants cleared the goods without payment of duty - retrospectivity of liability - Held that - The activity of producing refined edible oil was held to be not a process of manufacture by the Hon ble Supreme Court in the case of M/s. Shyam Oil Cake Ltd (2004 (11) TMI 109 - SUPREME COURT OF INDIA ). Thereafter a new Chapter Note was inserted in Chapter 15 of CETA, 1985 vide Financial Bill, 2005 inserted on 28.02.2005 making the duty payable w.e.f. 1.3.2003. While brining forth the amendment, it provided for regularizing the duty already paid. The appellants discharged their duty liability on 13.05.2005. The argument on behalf of the Revenue that as the liability to pay duty is made retrospective, the respondents are liable to pay interest from 1.3.2003 onwards does not appear to be attractive. The liability to pay interest arises only when the amount becomes due. The amount falls due only after the insertion of the amendment. The respondents discharged their liability within the time limit. Though the product is made dutiable w.e.f. 1.3.2003, there was no liability to pay duty on that date, as the amendment occurred only on 28.02.2005. In our considered opinion, in the present case, there is no liability to pay interest. Also see Pushti Refineries (P) Ltd. Vs. CCE & ST, Bangalore 2014 (10) TMI 273 - CESTAT BANGALORE - Decided in favour of assessee.
Issues:
Challenge to demand of interest on excise duty liability due to retrospective effect of Chapter Note 4 to Chapter 15 of CETA, 1985. Analysis: The Revenue challenged the Commissioner (Appeals) order setting aside the demand of interest on excise duty liability. The respondents, engaged in manufacturing refined edible soya bean oil, were clearing goods without payment of duty after a Supreme Court judgment. The Department contended that refined oil became excisable after an amendment in Chapter Note 4 to Chapter 15 of CETA, 1985. A show cause notice was issued for excise duty demand, which was confirmed after adjudication. The Commissioner (Appeals) upheld the duty liability but held that the respondents were not liable to pay interest. The Revenue argued that the retrospective effect of the amendment made the respondents liable for interest from 1.3.2003. However, the appellants paid the duty within the prescribed time, and the Chapter note making the product dutiable did not exist at that time. The Tribunal noted that the activity of producing refined edible oil was not considered a manufacturing process by the Supreme Court earlier. A new Chapter Note was inserted in Chapter 15 of CETA, 1985 in 2005, making refined edible vegetable oils dutiable. The Note was inserted on 28.02.2005, with retrospective effect from 1.3.2003. The Revenue argued that interest was payable from 1.3.2003 onwards due to the retrospective liability. However, the Tribunal held that interest liability arises when the amount becomes due, which happened after the amendment. As the respondents paid the duty within the time limit and the duty liability arose only after the amendment, there was no liability to pay interest from 1.3.2003. Citing a similar case precedent, the Tribunal dismissed the appeal, upholding the Commissioner (Appeals) decision to set aside the demand of interest. In conclusion, the Tribunal dismissed the appeal, stating that the liability to pay interest did not arise from the retrospective effect of the amendment. The respondents were not liable to pay interest from 1.3.2003 as they paid the duty within the prescribed time, and the duty liability only arose after the amendment in Chapter Note 4 to Chapter 15 of CETA, 1985. The decision was in line with the precedent set in a similar case, where interest liability was not created with retrospective effect.
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