2016 (12) TMI 95 - HC - Central Excise

Levy of interest u/s 11 AB - imposition of penalty u/s 11 AC - whether the Revenue was correct in holding that interest and penalty cannot be levied prior to 28.09.1996? - provisions of sec 11AB and 11AC came into effect only on 28.09.1996 - Held that - The Original Authority itself has held that Section 11 AB and Section 11 AC came into statute only with effect from 28.09.1996 and as such, it cannot be levied prior to 28.09.1996 and since the said findings are content in nature, this Court is not inclined to interfere with the same. Therefore, the substantial questions of law is answered in negative. Appeal dismissed - levy of interest and penalty, not correct - decided against Revenue.

Summary

Issues:
1. Interpretation of provisions under Section 11 AB and 11 AC for levying interest and penalty.
2. Evidentiary value of statements given by deponents regarding illicit activities.
3. Manufacturing process of green polishing bars and availability of electricity supply.
4. Application of Evidence Act versus preponderance of probabilities in legal proceedings.

Analysis:

Issue 1:
The appellant, the Revenue, contested the dismissal of their appeal by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) regarding the levy of interest on duty under Section 11 AB and penalty under Section 11 AC. The Tribunal held that such levies cannot be imposed retrospectively prior to 28.09.1996. The appellant raised substantial questions of law challenging the Tribunal's decision.

Issue 2:
The Tribunal considered the evidentiary value of statements given by individuals regarding the illicit diversion of materials. The appellant argued that the Tribunal erred in ignoring the statements and not considering them as evidence in the case.

Issue 3:
Regarding the manufacturing process of green polishing bars, the Tribunal examined the availability of electricity supply from the Tamil Nadu Electricity Board during the relevant period. The appellant questioned the Tribunal's conclusion on the manufacturing process and the availability of electricity, raising doubts on the correctness of the decision.

Issue 4:
The appellant raised a legal issue concerning the application of the Evidence Act versus the concept of preponderance of probabilities in legal proceedings. The Tribunal's decision was challenged on the grounds of not applying the concept of preponderance of probabilities as per law.

In the judgment, the High Court analyzed the arguments presented by both parties. The Court noted that the Tribunal's decision was based on the absence of any interim order and the applicability of Supreme Court judgments. The Court upheld the Tribunal's decision, stating that the questions raised were factual and already addressed by previous legal precedents. The Court dismissed the appeal, confirming the Tribunal's order and emphasizing that Section 11 AB and 11 AC could not be levied prior to 28.09.1996. The judgment highlighted the importance of legal principles and precedents in determining the outcome of the case.