2010 (4) TMI 479 - HC - Central Excise

Non-application of mind - The question that was involved before the Tribunal was whether the respondent herein was required to pay interest in terms of Section 11AB of Central Excise Act? Held that - tribunal merely relying on certain decision, set aside interest. Tribunal could not have set aside interest when facts not considered. Impugned order set aside. Matter remanded to Tribunal to consider material facts and pass fresh order.

Summary

Issues:
Challenge to Final Order by Revenue on interest payment under Sec. 11AB of Central Excise Act.

Analysis:
The High Court of Karnataka dealt with an appeal challenging a Final Order passed by CESTAT regarding the liability of the assessee to pay interest under Section 11AB of the Central Excise Act. The main issue revolved around whether the assessee had deposited the duty amount before the issuance of the show cause notice. The Court noted that the Tribunal did not adequately consider this crucial aspect. While the original order mentioned that the notice was issued on a specific date and the amount was deposited shortly after, the Tribunal failed to analyze whether the assessee had fulfilled its obligation in a timely manner. The Tribunal's decision to set aside the interest without a proper examination of the material facts and solely relying on previous judgments was deemed incorrect by the Court. Consequently, the Court set aside the Tribunal's order and remanded the matter back to reevaluate whether the assessee was indeed liable to pay interest under Section 11AB, emphasizing the importance of considering the specific circumstances of the case as outlined in the provision. As a result of this decision, the substantial questions of law were answered in favor of the revenue, leading to the allowance of the appeal by the Court.