2015 (6) TMI 619 - HC - Central Excise

Interest u/s 11AB - Scope of Section 11AB - Whether on the facts of the case and in law, whether CESTAT was correct in law in deciding the appeal on the ground that section 11AB is prospective - Held that - Court has not admitted the Appeal on the question of law now raised by the Revenue. However, the Appeal has been admitted on the substantial question of law formulated on 20th October, 2005. The order was passed after noting the contentions of the Revenue and perusing the memo of Appeal. In these circumstances, by clarifying that the abovenoted question raised during the course of arguments can be examined in an appropriate case that we refuse to interfere with the order under challenge on this ground. The question of law that we have framed as substantial question of law has already been answered in series of decisions against the Revenue. The Tribunal has rightly placed reliance upon the language of Section 11AB. It has also placed reliance upon coordinate Bench decision in the case of Marcandy Prasad (1998 (3) TMI 316 - CEGAT, CALCUTTA). The Revenue has accepted the fact that the provision and as interpreted in the case of M/s. M.P. Tapes v. Commissioner of Central Excise lays down the correct law. - The provisions of Section 11AB, inserted w.e.f. 28th September, 1996 are in the nature of penal interest and would apply only to those cases where clearances were affected after 28th September, 1996, irrespective of the date of passing of the adjudication order. The above position is emanating from the arguments the Revenue and it binds it. In these circumstances, the question of law termed as substantial question of law by the Revenue and formulated by this Court cannot be answered in favour of the Revenue. - Decided against Revenue.

Summary

Issues:
Challenge to CESTAT order on the ground of Section 11AB applicability and refund claim for interest pre-28th September, 1996.

Analysis:
The case involved an appeal challenging the CESTAT order regarding the applicability of Section 11AB and the refund claim for interest pre-28th September, 1996. The appellant, engaged in the manufacturing business, cleared goods without following Central Excise rules, leading to a duty demand of Rs. 15,36,350. The appellant claimed refund of interest paid erroneously pre-28th September, 1996. The Deputy Commissioner rejected the refund claim, stating interest could be imposed post-28th September, 1996. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

The Tribunal, relying on various judgments, held that Sections 11AB and 11AC are prospective, making the appellant liable to pay interest only post-28th September, 1996. The Tribunal allowed the appellant's appeal based on this interpretation. The Revenue contended that the refund claim was untenable under Section 11AB, as the appellant had not challenged the original order. However, the respondent argued that the claim was maintainable, citing legal precedents.

The High Court rejected the Revenue's argument, stating it was too late to challenge the maintainability of the refund claim. The Court emphasized that the appellant sought a refund for interest erroneously collected pre-28th September, 1996, a period when no interest could be levied on unpaid duty. The Court refused to entertain new objections raised by the Revenue and upheld the Tribunal's decision based on the interpretation of Section 11AB. The Court concluded that the question of law framed earlier had been consistently decided against the Revenue in previous cases, and hence, the appeal was dismissed.

In summary, the High Court dismissed the appeal, upholding the Tribunal's decision regarding the applicability of Section 11AB and the refund claim for interest pre-28th September, 1996. The Court emphasized the prospective nature of Sections 11AB and 11AC, leading to the appellant being liable to pay interest only post-28th September, 1996. The Court refused to entertain new objections raised by the Revenue and upheld the Tribunal's decision based on legal precedents and the interpretation of Section 11AB.