2007 (8) TMI 273 - AT - Central Excise

Recovery of interest provision for recovery of interest i.e. section 11AA was inserted only on 26/05/1995 hence demand for interest for the period prior to that is not tenable - attachment order is appealable order and therefore the Commissioner (Appeals) ought to have entertained the appeal on merits and ought not to have dismissed the appeal against the attachment order as non-maintainable

Summary

Issues: Liability to pay interest under Section 11AA of the Central Excise Act and appealability of attachment order.

Liability to pay interest under Section 11AA:
The case involved the appellants, engaged in the manufacture of metallised aluminium paper, availing modvat credit on inputs. The department issued a show cause notice questioning the admissibility of the credit, leading to a confirmed order-in-original for payment. Subsequently, a demand for interest was raised by the Superintendent of Central Excise. The appellants argued that as the case pertained to a period before the introduction of the provision for recovery of interest in the Central Excise Act, the demand for interest was untenable. The Commissioner (Appeals) dismissed the appeal as non-maintainable, considering the demand for payment of interest as the cause of action. However, the Tribunal found that the liability to interest needed to be examined on merits in light of statutory provisions and relevant case law, such as the Narmada Chematur Petrochemicals Ltd. case. Therefore, the Tribunal set aside the impugned order and remanded the case to the adjudicating authority for a fresh decision on the liability of the appellants to interest under Section 11AA.

Appealability of attachment order:
Regarding the attachment order issued by the Assistant Commissioner of Central Excise, the appellants had appealed before the Commissioner (Appeals), who dismissed it as non-maintainable. The Tribunal noted that as per the precedent set in the Rinkle Floral Creations Pvt. Ltd. case, such orders are appealable. Therefore, the Commissioner (Appeals) should have entertained the appeal on merits rather than dismissing it as non-maintainable. The Tribunal set aside the impugned order and remanded the case for a fresh decision on the attachment of goods, instructing the adjudicating authority to pass orders in accordance with the law after providing a reasonable opportunity of hearing to the appellants.

In conclusion, the Tribunal allowed the appeal by way of remand, emphasizing the need for a thorough examination of the liability to pay interest under Section 11AA and the appealability of the attachment order. The case was remanded for fresh decisions on these crucial issues, ensuring proper consideration of statutory provisions, case law, and providing a fair opportunity for the appellants to present their case.