2003 (10) TMI 104 - AT - Customs

Summary

Issues: Recovery of interest under Section 112(2) of the Finance Act, 2000.

The judgment by the Appellate Tribunal CESTAT, New Delhi involved the challenge against the recovery of interest under Section 112(2) of the Finance Act, 2000. The appellants had taken Modvat credit for HSD oil used in their factory, which was denied to them by the Assistant Commissioner. The denial was based on Section 112(2) of the Finance Act, 2000, which validated the denial of credit of duty paid on HSD oil. The appellants argued that interest payment should start after 30 days from the date of confirmation of the demand, not from the date of the Finance Act's assent. They contended that interest liability arises only if payments are not made within 30 days from the respective order-in-original dates. The Tribunal analyzed the provisions of Section 112(2)(b) of the Finance Act, 2000, which mandated the recovery of credit of duty taken or utilized within 30 days from the Act's assent, failing which interest at 24% per annum becomes payable.

The appellants argued that recovery proceedings cannot commence until after the completion of adjudication to quantify the amount of credit of duty. However, the Tribunal noted that the extent of credit taken or utilized did not require determination by Central Excise Officers as it was available in the appellants' records. The appellants were required to make suo motu payment of Modvat credit within the stipulated period, failing which interest liability would be incurred as provided under Section 112(2)(b). The Tribunal rejected the argument that recovery must follow the limitations of Section 11A of the Central Excise Act, emphasizing that the recovery action is not stalled until the expiry of 30 days from the Act's assent. It held that interest liability accrues once payment is delayed beyond the stipulated 30-day period.

In conclusion, the Tribunal held that the interest amount was correctly demanded, and the appeals challenging the recovery of interest under Section 112(2) of the Finance Act, 2000, were rejected. The judgment underscored the legal obligation on appellants to pay back the credit without waiting for confirmation of demand, emphasizing that interest liability arises if payment is delayed beyond the stipulated 30-day period.