2000 (7) TMI 90 - SC - Central Excise

Whether the amount of interest Rs. 29,37,521.66p. which had accrued on the principal amount deposited should be paid to the respondent-company? Held that - It is more than evident that the learned Single Judge by his order dated 22nd December, 1983 while allowing the writ petition of the respondent and setting aside the demand which was sought to be raised specifically directed that only the principal amount which had been deposited should be paid to the appellant hereinabove. Perhaps the learned Single Judge while quashing the demand could have ordered the entire amount which had been deposited by the respondent along with interest thereof to be refunded to the Company as no valid demand was in existence as a result of the said decision. But the learned Judge chose to direct that out of the total amount deposited on which interest had accrued only the principal amount should be paid to the appellant and the interest to the respondent. Once this order had become final the question of the appellant subsequently contending that they are entitled to receive the interest also does not arise. The order dated 22nd December, 1983, relevant part of which has been quoted hereinabove, makes it clear that it is only the principal amount which had been deposited which has to be paid to the appellant and not anything more. Appeal dismissed.

Summary

Issues:
Demand of excise duty on intermediate product, challenge to demand in writ petition, grant of interim injunction, investment of excise duty amounts, disposal of writ petition, payment of principal amount, payment of interest on principal amount, appeal against payment of interest.

Analysis:
The appeal before the Supreme Court involved a challenge to the demand of excise duty on an intermediate product, specifically nylon yarn, by the respondent manufacturing company. The respondent contended that the nylon yarn was not an excisable commodity as it was used internally for manufacturing another product. The case originated from a writ petition filed in the Bombay High Court, where a Single Judge, after admitting the petition, granted an interim injunction subject to certain conditions, including the execution of a bond and furnishing a bank guarantee. The respondent, instead of complying with the order, sought permission to deposit the excise duty amount in court, which was granted, and the court directed the investment of these amounts in a nationalized bank.

The writ petition was ultimately disposed of by the Single Judge of the Bombay High Court, who quashed the demand for excise duty, citing a violation of the principle of natural justice due to lack of a proper hearing. The Judge allowed the Excise Authority to pass a fresh order and directed the payment of the principal amount deposited by the respondent to the appellant. The order specified that only the principal amount should be paid to the appellant, not the interest accrued on it. This order was not challenged by either party and became final.

Subsequently, when the appellant applied for payment, the court issued a cheque for the principal amount of excise duty. The respondent then sought payment of the accrued interest on the principal amount, which was granted by the court. An appeal was filed against this order, which was dismissed by the Division Bench, leading to the present appeal before the Supreme Court.

The Supreme Court, after considering the facts and the previous orders, concluded that the appeal lacked merit. The Court emphasized that the earlier order explicitly directed the payment of only the principal amount deposited by the respondent, not the interest. Therefore, the appellant's claim for interest did not hold ground as per the final order of the Single Judge. The appeal was subsequently dismissed with costs.

This detailed analysis of the judgment highlights the legal issues surrounding the demand for excise duty, the disposal of the writ petition, and the subsequent payment of principal amount and interest, providing a comprehensive overview of the case and its resolution by the courts.