2000 (4) TMI 50 - HC - Central Excise

Summary

Issues Involved:

1. Recovery of interest at the rate of 20% under Section 11AA of the Central Excise Act, 1944.
2. Applicability of the Supreme Court's order fixing interest at 12% per annum.
3. Legality of the Department's demand for interest at 20% per annum.

Issue-wise Detailed Analysis:

1. Recovery of interest at the rate of 20% under Section 11AA of the Central Excise Act, 1944:

The petitioner-Company challenged the recovery of interest at the rate of 20% per annum under Section 11AA of the Central Excise Act, 1944, for amounts repayable following the Supreme Court's dismissal of their appeals. The Department had issued letters demanding payment of interest at this higher rate, arguing that Section 11AA applied because the petitioner failed to pay the duty within three months from the date of determination. However, the petitioners contended that Section 11AA was inapplicable as there was no determination of duty under Section 11A, and the Supreme Court had already fixed the interest rate at 12% per annum in its interim order.

2. Applicability of the Supreme Court's order fixing interest at 12% per annum:

The Supreme Court, in its interim order dated 14th August 1984, had directed that if the petitioner lost in its appeals, it would have to refund the decretal amounts with interest at the rate of 12% per annum from the dates when they were recovered until repayments. This order was binding and specified the interest rate for repayments. The Department's attempt to impose a higher interest rate of 20% under Section 11AA was in direct conflict with this Supreme Court order.

3. Legality of the Department's demand for interest at 20% per annum:

The Department's demand for interest at 20% per annum was deemed arbitrary and illegal. The Supreme Court had explicitly fixed the interest rate at 12% for repayments, and the Department had no jurisdiction to modify this rate by invoking Section 11AA or 11AB of the Central Excise Act. The Court emphasized that the Department's actions violated the Supreme Court's order and were not supported by any contractual stipulation agreed upon by the petitioner. The Department's reliance on Section 11AA was misplaced, as it applied only when duty was determined under Section 11A(2), which was not the case here.

Conclusion:

The Court declared the Department's action and orders of recovery of interest at the rate of 20% per annum under Section 11AA or 11AB to be illegal and inoperative, insofar as they conflicted with the Supreme Court's order fixing the interest rate at 12% per annum. The Department was directed to finalize the calculations for recovery based on the 12% interest rate and make suitable refund orders if any excess amount had been recovered. The rule was made absolute in both petitions, with no order as to costs.