2016 (4) TMI 798 - HC - Central Excise

Maintainability of appeal - Held that - The first reason as to why the appeals ought not to have been filed by the Department is that the order of the Tribunal was passed upon production of necessary documentary proof and confirmation of the same by both sides. Also admittedly, there was a huge excess amount, available with the Department and what was sought to be done on 30.6.2006 was only an adjustment out of the same. Under Section 11 of the Central Excise Act, the Department itself could have adjusted the excess amount, even if there was any even at that time. When credit was available to the account of the assessee, the Department cannot act like Shylock demanding a pound of flesh. Therefore, the Department, after having confirmed the facts as borne out by documents produced before the Tribunal, could not have come up with the above appeals. - Decided against the revenue

Summary

Issues:
1. Justification of interest demand for differential duty not paid in time despite sufficient credit in current account.
2. Justification of interest not payable in the above circumstances based on legal precedents.

Analysis:
1. The appeals were filed by the Revenue under Section 35G of the Central Excise Act, 1944, questioning the Tribunal's decision on interest demand for the differential duty not paid in time despite the assessee having sufficient credit in their current account during that period. The Tribunal allowed the appeals based on the confirmation of facts by both parties and the availability of credit in the CENVAT account. The Department's subsequent demand for interest was protested by the assessee, citing the excess amount available and the payment made through CENVAT credit. The Tribunal's order was upheld by the High Court, emphasizing that the Department, having confirmed the facts during the proceedings, could not file the appeals challenging the Tribunal's decision.

2. The second issue pertained to the justification of interest not being payable in the circumstances outlined above, especially in light of the legal precedent set by the Hon'ble Supreme Court in the case of M/s. SKF Ltd. The High Court noted that there was a significant excess amount available with the Department, and the adjustment sought by the Department was merely out of this excess amount. The Court highlighted that under Section 11 of the Central Excise Act, the Department had the authority to adjust the excess amount even at the time of the alleged duty shortfall. The Court criticized the Department's stance, likening it to demanding a pound of flesh despite the availability of credit in the assessee's account. Consequently, the questions of law were answered in favor of the second respondent/assessee, and the civil miscellaneous appeals were dismissed without costs.