2008 (10) TMI 220 - AT - Central Excise

Interest delayed reversal of cenvat credit goods removed as such - Section 11AB provides for recovery of interest in cases of delayed payment of duty. In the instant case, an amount equal to the credit availed is paid on a date subsequent to the date of clearance of such inputs. Held that - the argument that Section 11AB applied in such cases is not correct. No provision in the statute enabling recovery of interest in cases of delay in reversal/payment of credit relatable to inputs removed has been pointed out by the Revenue. Revenue appeal dismissed.

Summary

Issues:
1. Demand of interest for delay in reversing credit of duty availed on inputs.
2. Applicability of Section 11AB of the Central Excise Act.
3. Validity of interest demand without issuing a show cause notice.
4. Authority of the Committee of Commissioners to file an appeal.

Analysis:
1. The issue in this case revolves around the demand of interest for the delay in reversing credit of duty availed on inputs. The Commissioner (A) affirmed the demand of interest based on Rule 3 of Cenvat Credit Rules, 2002, which requires payment equal to the credit availed on inputs removed from the factory. The appellant delayed in reversing the credit, leading to the interest demand upheld by the Commissioner (A).

2. The appellant raised the question of the applicability of Section 11AB of the Central Excise Act. The Revenue contended that interest could be collected when duty was short paid and recovered with delay. However, the Tribunal noted that Section 11AB applies to delayed payment of duty, not to cases where credit availed is paid subsequent to the clearance of inputs.

3. The validity of demanding interest without issuing a show cause notice was also debated. The Consultant argued that the interest was demanded incorrectly without a show cause notice, citing that Section 11AB does not specifically enable the department to recover interest in such cases. The Tribunal agreed, emphasizing that the impugned order followed a previous decision accepted by the department, making it non-challengeable.

4. Another issue raised was the authority of the Committee of Commissioners to file an appeal. The Revenue argued that the appeal was not sustainable as it was filed by the Committee and not by the Central Excise Officer authorized by the Committee. However, the Tribunal found this to be a curable defect, citing precedents from the High Courts of Bombay and Karnataka supporting the validity of appeals filed by Committees.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue, upholding the decision of the Commissioner (A) regarding the demand of interest for the delayed reversal of credit on inputs. The Tribunal emphasized the lack of specific provisions enabling interest recovery in such cases and the acceptance of the impugned order by the department based on previous decisions. The judgment was based on established judicial authorities and the small amount involved in the case.