2000 (12) TMI 108 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the demand for interest on delayed payment of cess under Section 11AA of the Central Excise Act, 1944.
2. Applicability of Section 11AA of the Central Excise Act, 1944, to the Produce Cess Act, 1966, and the Vegetable Oils Cess Act, 1983.
3. Impact of stay orders by the High Court and the Supreme Court on the liability to pay interest.

Issue-wise Detailed Analysis:

1. Legality of the Demand for Interest on Delayed Payment of Cess:
The petitioner challenged the notice demanding interest at 20% per annum on the delayed payment of cess on vegetable oil. The petitioner contended that neither the Produce Cess Act, 1966 (the 1966 Act) nor the Vegetable Oils Cess Act, 1983 (the 1983 Act) contained provisions for charging interest on delayed cess payments. The respondents argued that the stay orders from the High Court and the Supreme Court did not exempt the petitioner from paying interest under Section 11AA of the Central Excise Act, 1944 (the 1944 Act), and that the petitioner had deliberately delayed payment.

2. Applicability of Section 11AA of the Central Excise Act, 1944:
The court examined whether Section 11AA of the 1944 Act, which was inserted on 26-5-1995, could be applied to the 1966 Act and the 1983 Act. The court noted that Section 15(2) of the 1966 Act and Section 3(4) of the 1983 Act made the provisions of the 1944 Act applicable for the levy and collection of duties, but did not explicitly authorize the charging of interest on delayed payments of cess. The court agreed with the petitioner that Section 11AA of the 1944 Act could not be invoked by the respondents for charging interest on delayed cess payments, as no corresponding amendments were made in the 1966 Act or the 1983 Act to empower such interest charges.

3. Impact of Stay Orders by the High Court and the Supreme Court:
The petitioner argued that since the collection of cess was stayed by the courts, the provisions of Section 11AA of the 1944 Act could not be applied. The court, however, held that the stay orders did not create a right in favor of the petitioner to avoid interest payments. The court cited the Supreme Court's decisions in J.K. Synthetics Ltd. v. Commercial Taxes Officer and India Carbon Ltd. v. State of Assam, which stated that interest on delayed tax payments could only be levied if explicitly provided by statute. Nevertheless, the court opined that interest could still be claimed under common law principles, as a person who avoids payment due to a stay order could be held liable for interest. The court referenced M/s. Style (Dress Land) v. Union Territory, Chandigarh & Anr., where the Supreme Court upheld an order for interest on delayed payments due to a stay order.

Conclusion:
The court concluded that the respondents could not charge interest from the petitioner under Section 11AA of the 1944 Act for delayed cess payments, as no statutory provision in the 1966 Act or the 1983 Act authorized such charges. However, the court allowed the respondents the liberty to recover interest through other legal remedies, such as filing a suit.

Judgment:
The writ petition was allowed, and the impugned notice demanding interest was declared illegal and quashed. The respondents were given the liberty to recover interest through appropriate legal means.