1998 (5) TMI 102 - AT - Central Excise

Summary

Issues Involved:
The issue involves seeking reference to the jurisdictional High Court under Section 35G of the Central Excise Act, 1944 regarding the applicability of penal interest under Section 11AB of the Act to a case where duty became payable before the provision's incorporation.

Comprehensive Details:

1. The Commissioner of Central Excise, Coimbatore sought reference to the High Court under Section 35G of the Central Excise Act, 1944, questioning the correctness of the Tribunal's decision on the applicability of penal interest under Section 11AB. The issue pertained to duty becoming payable on 23-1-1997, before the provision's effective date of 28-9-1996.

2. The demand for differential duty was related to clearances between September 1995 and January 1996. The Commissioner confirmed the demand and imposed penal interest under Section 11AB, along with a penalty under Section 11AC. The Tribunal, in the appeal by the assessee, set aside the mandatory penalty and penal interest. The department did not contest the penalty cancellation but raised a legal question on the penal interest imposition.

3. The Tribunal based its decision on the Supreme Court's ruling in Brij Mohan v. Commissioner of Income Tax, stating that penal interest cannot be imposed retrospectively for duty short-paid before the provision's inclusion. Citing the principle that penal laws have prospective, not retrospective, effect, the Tribunal concluded that penal interest falls under this purview, aligning with the Supreme Court's stance in the Brij Mohan case.

4. Given the precedent set by the aforementioned decision, the Tribunal determined that no legal question merited referral to the High Court, as the matter was adequately addressed by existing jurisprudence.

5. Consequently, the Reference Application was dismissed, affirming the Tribunal's decision on the applicability of penal interest under Section 11AB in the case at hand.