1986 (5) TMI 124 - AT - Central Excise

Issues:
1. Clarification on payment of interest on yarn duty under Rule 49A for fabrics cleared for home consumption or export.
2. Determination of interest leviable under Rule 49A on the duty on yarn compared to duty under Section 3 of the Central Excises and Salt Act, 1944.
3. Department's right to recover interest under Rule 49A regardless of fabrics being cleared for home consumption or export.

Analysis:
1. The Collector filed an application under Section 35G seeking clarification on various points of law arising from a Tribunal order related to interest on yarn duty. The Collector argued that interest under Rule 49A is separate from duty under Section 3, and the Tribunal's omission of Rule 13 in considering interest on yarn duty was incorrect. The Collector contended that interest under Rule 49A is different from duty under Section 3, and both are debited separately in the PLA account. The Collector sought clarification on whether interest can be waived and emphasized the distinction between duty and interest. The Tribunal found the Collector's application to be based on a misinterpretation of the Tribunal's order and dismissed the application as misconceived.

2. The Respondent argued that the Collector's application was more like an appeal against the Tribunal's order and criticized the application's vagueness. The Respondent contended that Rule 49A is prescribed for collecting duty on yarn and interest, and the Tribunal had correctly considered these aspects in its order. The Respondent highlighted that where no duty on yarn was payable, no interest was leviable. The Respondent asserted that the Tribunal's order was final, subject to appeal to the Supreme Court, and opposed the reference application to the High Court. The Tribunal agreed with the Respondent's arguments and dismissed the Collector's application, stating that no clarification was needed as interest under Rule 49A is not part of duty under Section 3.

3. The Tribunal clarified that interest leviable under Rule 49 or Rule 49A is separate from duty under Section 3 and is not part of the duty. It explained that where duty on yarn is nil, interest payable is also nil, as it is a percentage of the duty leviable. The Tribunal referenced a case involving the deferment of duty payment with interest, highlighting that interest under Rule 49 or Rule 49A is distinct from duty. The Tribunal emphasized that the Collector's application was misconceived and lacked substantive arguments, leading to the dismissal of the reference application to the High Court.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the arguments presented by both parties and the Tribunal's reasoning for dismissing the Collector's application seeking clarification on interest leviable on yarn duty under Rule 49A.

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