2017 (2) TMI 614 - AT - Central Excise

Whether the appellant is required to pay interest from the date of default till 23.01.2006 that is, the date of deposit of ₹ 50.00 Lakhs u/s 35F of CEA, 1944, as a condition to hear their appeal, or to be paid till they reversed the credit i.e. 10.09.2012 pursuant to the order of the Tribunal reducing the demand to ₹ 9,88,236/-? - Held that - though the appellant was required to deposit the entire amount of duty and penalty, however, the Tribunal has reduced the said pre-deposit amount to ₹ 50.00 Lakhs against the confirmed liability of ₹ 2.64 crores. Therefore, it is incorrect to say that the appellant had not paid the amount of ₹ 9,88,236/- as on 23.01.2006, which was ultimately confirmed by the Tribunal, in disposing their appeal by Order dt.29.06.2012 and reversed by the Appellant on 10.09.2012, pursuant to the said Order. Whether benefit to discharge 25% of the penalty be extended to the appellant considering adjustment of interest from the pre-deposit amount? - Held that - the appellant is required to pay interest till 23.01.2006 and consequently, also eligible to claim the benefit to discharge 25% of the penalty of ₹ 9,88,236/-, since, they complied with the direction of the Tribunal Order dated 29.06.2012, in the sense that the required amount due pursuant to the said Order was lying with the department as on the date of the order of the Tribunal. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Calculation of interest from default date, Benefit of 25% penalty discharge.

Analysis:
The appeal was filed against an order by the Commissioner (Appeals) regarding a demand notice for duty recovery. The Tribunal directed the appellant to deposit a specific amount as a condition to hear the appeal. The Tribunal later decided the appeal, reducing the demand amount. The appellant requested adjustment of penalty and interest from the pre-deposit amount. The Assistant Commissioner sanctioned a refund claim, deducting penalty and interest. The appellant contended that interest calculation by the department was incorrect and relied on legal precedents to support their argument.

The appellant argued that interest should be calculated from the pre-deposit date, not the default date, and that they should benefit from the 25% penalty discharge. The Revenue maintained that the amount deposited was not a final payment towards the duty, interest, and penalty. The Tribunal considered whether interest should be paid from the default date or the pre-deposit date, and if the appellant should benefit from the penalty discharge. The Tribunal noted that the right to appeal is subject to conditions, and the appellant had complied with the Tribunal's direction regarding the deposit amount.

The Tribunal held that the appellant should pay interest until the pre-deposit date and could claim the benefit of the penalty discharge. The impugned order was set aside, and the appeal was allowed with any consequential relief as per law. The decision was based on the appellant's compliance with the Tribunal's order and legal principles established in previous cases.