2005 (5) TMI 147 - AT - Central Excise

Summary

Issues:
Challenge against dropping of interest on a differential amount of duty paid belatedly by the respondents.

Analysis:

Issue 1: Leviability of interest on outstanding duty amount
The appeal raised a question on whether interest is leviable on the outstanding amount of duty belatedly paid by the assessee under various provisions of law. The appellant argued against the levy of interest under Section 11AB as the duty was paid before the issuance of the show cause notice. On the other hand, the respondent contended that interest on belatedly paid duty is mandatory under Rule 173G(1)(d) or Rule 8 of CER, 2001/2002. The tribunal accepted the appellant's case, emphasizing the mandatory language of Rule 173G(1)(d) and Rule 8 of CER, 2001/2002, which do not depend on Section 11AB. As the duty was paid after the due date, the tribunal found the demand for interest under these provisions justified.

Issue 2: Applicability of Section 11AB
The tribunal clarified that the facts of the case did not attract Section 11AB as there was no suppression or criminal element in the assessee's conduct. The payment of duty was voluntary, and Section 11AB was wrongly invoked in the show cause notice and lower authorities' orders. The tribunal concluded that Section 11AB was inapplicable to the case, and the provisions of Rule 173G(1)(d) and Rule 8 were correctly invoked for the levy of interest on the belatedly paid duty amount.

Issue 3: Precedents on interest payment
The tribunal noted that the appellant cited case law to support the argument that no interest could be demanded under Section 11AB if the duty amount was paid before the issuance of the show cause notice. However, as Section 11AB was deemed inapplicable to the case, the cited case law did not support the respondent's position. Consequently, the impugned order was set aside, and the appeal of the Revenue was allowed.

In conclusion, the tribunal upheld the levy of interest on the belatedly paid duty amount under Rule 173G(1)(d) and Rule 8 of CER, 2001/2002, ruling out the applicability of Section 11AB due to the voluntary nature of the payment and absence of any suppression or criminal element in the conduct of the assessee.