Interest liability in case of Confirmed Demand - relevant date for calculation of interest

[CA Surender Gupta]

Whether the interest is chargeable from the date of original adjudication order or from the date of issuance of the adjudication orders in de-novo proceedings, once the demand of duty was upheld by the Tribunal but only the quantum of duty was ordered to be re-adjudicated in de-novo proceedings?

Scope of Section 11AA of the Central Excise Act, 1944

Section 11AA of the Act provides that if an assessee fails to pay duty within three months from the date of determination, he is liable to pay interest thereafter. Explanation 1 and 2 thereof will not be applicable in the present case as in the case in hand the duty determined has not been reduced or increased by the appellate authority. Rather, it is a case where the Tribunal finding merit in the contention raised by the respondent remanded the matter back to the adjudicating authority for fresh determination of the amount of duty payable, which necessarily means that the impugned order had lost its significance and it is only the order passed after remand, which would be applicable and enforceable.  

Punjab and Haryana High Court in the this case [2016 (9) TMI 1178 - PUNJAB AND HARYANA HIGH COURT] followed the decisions in the cases of  Blue Star Limited v. Union of India, 2009 (10) TMI 257 - BOMBAY HIGH COURT and Commissioner of Central Excise, Chennai- II v. Lucas TVS Ltd., 2016 (1) TMI 479 - MADRAS HIGH COURT ; and held that:

Once in terms of the order passed by the adjudicating authority after remand by the Tribunal, there is no delay in deposit of duty by the respondent in view of Section 11AA of the Act, the demand of interest is not justifiable.

 

See:- Commissioner, Central Excise, Ludhiana Versus M/s National Fertilizers Limited - 2016 (9) TMI 1178 - PUNJAB AND HARYANA HIGH COURT
 

Discussions to this article

[Ganeshan Kalyani]

Nice article sir.

[AJAY KUMAR]

Good article !. But the HC is tricky as it covers where the original orders are totally set aside and then sent for de novo for quantification . Its applicability may be questioned and may be a subject matter of litigation again !