2018 (3) TMI 1423 - HC - Central Excise

Interest - relevant date for calculation of interest - contention of the appellant is that appellant would be liable to pay interest after the order is passed in Original by the authority pursuant to the order of remand and not from the date the order in Original passed before remand - Held that - Only because in the order of remand, the Tribunal did not record the words set aside the order of adjudicating authority , that would not mean that while remitting the matter, the Original order was intact - the decision in the case of BLUE STAR LIMITED Versus UNION OF INDIA 2009 (10) TMI 257 - BOMBAY HIGH COURT , where it was held that Setting aside an order means there is no order and party relegated for fresh adjudication. Stage of adjudication cannot be said to be determination. An adjudication will culminate in an order and such order would be determination and/or ascertainment of duty, and no interest is payable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of liability for interest payment in a customs case post remand.

Analysis:
The main issue in this case revolves around the liability for interest payment by the appellant. The question of law that arose was whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was correct in determining that interest was payable from the date of the first Order-in-Original, despite the matter being remanded for re-quantification of demand. The appellant argued that interest should accrue only after the order post-remand, relying on a previous judgment by the Bombay High Court in the case of Blue Star Ltd. The respondent contended that the duty was payable from the date of the first order itself, as the remand was for procedural reasons and did not set aside the original order.

The court examined the sequence of events leading to the determination of liability. The original order was passed in 1998, challenged by the appellant, and subsequently remanded by the appellate authority for re-assessment. The Tribunal, in remitting the matter, directed the Commissioner to consider specific aspects for re-determination. The adjudicating authority then issued a new order in 2005, imposing a revised liability on the appellant. The court noted that the duty determined in the first and second orders differed, along with the confirmed demand and modvat credit adjustments, indicating a substantial change post-remand.

The court considered the arguments presented by both parties and the specifics of the remand process. It was observed that the Tribunal's failure to explicitly state "set aside the order of adjudicating authority" did not mean the original order remained intact. The court emphasized that the duty determined and the demand confirmed post-remand were distinct from the initial order. In light of these findings, the court held that the principles established in the Blue Star case were applicable to the present situation, supporting the appellant's position regarding interest payment liability.

Regarding the penalty imposed on the appellant, the court noted that the Tribunal had reduced the penalty amount from ?1,00,000 to ?20,000. Consequently, the court answered the substantial question of law in favor of the appellant, setting aside the impugned judgment and order, except for the penalty aspect. As a result, the appeal was partly allowed, providing clarity on the liability for interest payment post-remand in customs cases.