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2020 (10) TMI 1063 - AT - Central ExciseCalculation of Interest for delayed payment of Excise Duty - relevant date - period of dispute is September, 2005 to March, 2015 - whether the demand of interest is to be calculated from the date of clearance of goods upto the date of actual payment of duty or from the date of determination of due amount till actual date of payment of duty? HELD THAT - Similar issue arose before the Division Bench of this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI VERSUS LUCAS TVS LTD. 2009 (12) TMI 828 - CESTAT CHENNAI wherein the facts were that vide adjudication orders dated 9.1.1995 and 10.02.1995, the demand of over ₹ 34 lakhs was determined. These demands were set aside by the Commissioner (Appeals) vide an order dated 20.06.1995. The order-in-appeal was set aside by the Tribunal and the matter was remanded to the Commissioner (Appeals) vide Final Order dated 24.01.1997. The demand was re-confirmed by the Commissioner (Appeals) vide order dated 26.12.2000. It was the contention of the Revenue that since the demand of ₹ 34 lakhs, earlier confirmed in Jan., /Feb., 1995, although set aside by the Commissioner (Appeals) earlier in June, 1995, was restored by the subsequent order of the Commissioner (Appeals) dated 26.12.2000. As the determination of the duty had taken effect in Jan./Feb., 1995, therefore, due to delay in payment of duty, the assessee was liable to pay interest from August, 1995. This Tribunal held that final determination can be said to have been made on 26.12.2000 with passing of the order of the Commissioner (Appeals) after remand. In the facts of the present case also, the Commissioner (Appeals) has redetermined the duty liability by his order dated 28.02.2015, as the demand was set aside for the period 14.01.2007 to 09.03.2010 and only re-determined for the period August, 2005 to Jan. 2007 - the appellant /assessee is liable to pay interest for one month i.e. from 1.3.2015 to 31.03.2015, which they have admittedly paid. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Calculation of interest on differential excise duty. 2. Applicability of Section 4 or Section 4A of the Central Excise Act for retail packs weighing up to 10 grams. 3. Validity of the demand and penalty imposed by the Department. 4. Maintainability of the appeal against the Department's letter demanding interest. Issue-wise Detailed Analysis: 1. Calculation of Interest on Differential Excise Duty: The core issue in this appeal is whether the interest on the differential duty should be calculated from the date of clearance of goods to the date of actual payment of duty or from the date of determination of the due amount until the actual payment date. The appellant argued that the interest should be calculated from the date of the order-in-appeal (28.02.2015) until the payment date (31.03.2015), as the differential duty became due only upon the appellate order. The Tribunal agreed, citing the precedent set by the Madras High Court in the case of Lucas TVS Ltd., which held that interest is payable from the date of final determination of the duty liability, not from the original date of clearance. 2. Applicability of Section 4 or Section 4A of the Central Excise Act: The appellant was initially assessing and paying excise duty on retail packs weighing up to 10 grams under Section 4 of the Central Excise Act, based on transaction value, rather than under Section 4A, which is based on the Retail Sale Price (RSP). The Department contended that these packs should be assessed under Section 4A, as they were considered 'multi-piece packages' under the Standard Weight & Measures (Packaged Commodity) Rules. However, the Tribunal found that after the omission of Rule 2(j) and Rule 17 of the Package Commodity Rules effective from 14.01.2007, there was no statutory requirement to declare RSP on retail packs weighing up to 10 grams, thus supporting the appellant's method of assessment under Section 4. 3. Validity of the Demand and Penalty Imposed by the Department: The Department issued multiple show cause notices and confirmed demands with penalties for various periods. The Tribunal noted that the appellant had succeeded in earlier appeals, which set aside the demands for the period after the omission of relevant rules. For the period before the omission, the Tribunal upheld the appellant's argument that the duty was correctly paid under Section 4. Consequently, the Tribunal set aside the penalties imposed on the appellant, as the differential duty was not due until the appellate order was passed. 4. Maintainability of the Appeal Against the Department's Letter Demanding Interest: The appellant challenged the Department's letters demanding interest calculated from the date of clearance. The Commissioner (Appeals) had rejected the appeal, stating that the letters were not appealable orders. The Tribunal found this reasoning self-contradictory and held that the appellant's appeal was maintainable. The Tribunal further ruled that the interest demand from the date of clearance was not sustainable, reaffirming that interest was payable only from the date of the appellate order. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and ruling that the appellant was liable to pay interest only for the period from 28.02.2015 to 31.03.2015, which had already been paid. The appellant was entitled to consequential benefits in accordance with the law. The decision was pronounced on 26.10.2020.
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