2017 (3) TMI 222 - AT - Central Excise

Interest for delayed payment of duty - time limitation - Held that - interest chargeable on delayed payment had to be only at the rate of 2% per month or for the matter 24% per annum as notified by the State Government in terms of the Section 11AB, which is between the permissible limits in terms of Section 11AB. Consequently, the demand notices are quashed and interest on delayed payment has to be recomputed only to the extent it is referred to the rate of interest @2% per month or 24% per annum under Rule 8(3) - matter remanded to adjudicating authority for de-novo adjudication - appeal filed by the Revenue before this forum becomes infructuous and is dismissed.

Summary

Issues Involved:
Appeal against setting aside Order-in-Original on grounds of being time-barred; Demand of interest on delayed payment of duty; Condonation of delay in filing revision application; Interpretation of Section 11AB of Central Excise Act, 1944; Application of High Court judgment on interest rates; Verification of provisions in Central Excise Rule, 2002; Consideration of High Court order by adjudicating authority.

Analysis:
The appeal was filed by the Revenue challenging the Lower Appellate Authority's decision to set aside the Order-in-Original solely on the basis of being time-barred. The issue revolved around the demand of interest amounting to ?23,55,718 calculated at ?1000 per day for the delay in duty payment. The Hon'ble Commissioner (Appeals) had initially set aside the interest demand based on a High Court decision. Subsequently, a final order was passed setting aside both the Order-in-Original and Order-in-Appeal for de-novo adjudication by the Adjudicating Authority.

The Additional Commissioner passed a de-novo order modifying the interest demand to ?1,73,708. The Commissioner requested condonation of delay in filing the revision application, which was granted under Section 35EE of the Central Excise Act, 1944. The Government noted that Section 11AB does not specify a time limit for the recovery of interest on delayed payments, and the demand for interest was deemed valid. The High Court judgment was cited to determine the applicable interest rates.

It was highlighted that the provisions regarding the charge of ?1000 per day were not present in the Central Excise Rule, 2002 for the relevant year, which the adjudicating authority failed to verify. Additionally, the High Court order was not considered by the adjudicating authority, indicating a lack of adherence to judicial discipline. Consequently, the impugned orders were set aside, and the case was remanded to the adjudicating authority for de-novo adjudication in line with the High Court judgment.

Ultimately, the appeal filed by the Revenue was deemed infructuous in light of the above discussions and was dismissed accordingly. The operative part of the order was pronounced in the open court, concluding the legal proceedings in this matter.