2006 (3) TMI 181 - HC - Central Excise

Issues Involved:

1. Validity of Notification No. 48/97-C.E. dated 2-9-97 under Section 12 of the Central Excise Act, 1944.
2. Legality of the demand for interest on delayed payment of duty in the order-in-original dated 24-12-1991.
3. Justification for the revenue's demand for interest based on the Delhi High Court order.
4. Appropriateness of recovering interest through the procedures under the Excise Act or Customs Act.

Issue-wise Detailed Analysis:

1. Validity of Notification No. 48/97-C.E. dated 2-9-97 under Section 12 of the Central Excise Act, 1944:

The petitioner argued that Section 12 of the Excise Act does not empower the Central Government to import recovery provisions from the Customs Act. Section 12 allows the Central Government to apply provisions of the Customs Act related to levy, exemption, drawback, warehousing, offences, penalties, confiscation, and appeals to excise duties. The petitioner contended that "levy" in Section 12 should not include "recovery/collection." However, the court found that the term "levy" is comprehensive, encompassing charge, quantification, and recovery. The court cited various dictionaries and judicial interpretations, concluding that "levy" includes collection. Therefore, the court held that Notification No. 48/97-C.E. is intra vires Section 12 of the Excise Act, allowing the Central Government to apply Customs Act provisions for recovery of excise duties.

2. Legality of the demand for interest on delayed payment of duty in the order-in-original dated 24-12-1991:

The petitioner claimed that at the time, there was no provision under the Excise Act to demand interest on delayed payment of duty, as Section 11AB, which introduced such a liability, was enacted in 1996. The court, however, noted that the Delhi High Court's order dated 9-7-91 directed the recovery of duty with interest at 17.5%. The firm's writ petition was dismissed on 22-1-92, aligning with the 9-7-91 decision. The court emphasized that the petitioner did not dispute the findings or seek clarification from the Delhi High Court. Consequently, the demand for duty with interest in the order dated 24-12-1991 was deemed legal.

3. Justification for the revenue's demand for interest based on the Delhi High Court order:

The petitioner argued that the Delhi High Court did not specifically order the firm to pay interest. The court clarified that the Delhi High Court's order on 22-1-92 dismissed the firm's petition by referencing the 9-7-91 decision, which included an interest directive. The court highlighted that the firm collected duty from customers during the stay and used it for business purposes. Thus, the demand for interest was justified based on the Delhi High Court's order.

4. Appropriateness of recovering interest through the procedures under the Excise Act or Customs Act:

The petitioner contended that interest recoverable pursuant to the Delhi High Court order should be recovered as a decree of a Civil Court, not through the Excise or Customs Act procedures. The court rejected this argument, stating that once the assessment order demanding duty with interest is deemed legal, the duty and interest are recoverable as government dues under the Act. The court emphasized that the machinery prescribed under the Act for recovery is applicable, and reliance on Rule 60 of the Bombay High Court Appellate Side Rules was misplaced.

Conclusion:

The court dismissed the petition, upholding the validity of Notification No. 48/97-C.E., the legality of the interest demand in the order-in-original dated 24-12-1991, the justification for the revenue's demand for interest based on the Delhi High Court order, and the appropriateness of recovering interest through the procedures under the Excise Act or Customs Act. The petition failed, and there was no order as to costs.

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