2016 (9) TMI 1178 - HC - Central Excise

Demand of interest - 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 - Held that - 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. 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. - Decided against the Revenue

Summary

Issues:
1. Calculation of interest under Section 11AA of the Central Excise Act, 1944.
2. Effect of reduction in duty amount on interest calculation.
3. Date from which interest is chargeable in de-novo proceedings.
4. Entitlement of revenue to claim duty.

Analysis:

1. The first issue pertains to the calculation of interest under Section 11AA of the Central Excise Act, 1944. The appellant contended that interest should be calculated from the date when duty was first determined to be payable. However, the respondent argued that as the duty amount was re-determined after remand, the interest calculation should be based on the revised duty amount. The court examined the provisions of Section 11AA and held that in cases where duty determination is remanded for fresh assessment, interest is not applicable if duty is paid within the stipulated time from the revised determination.

2. The second issue involves the effect of reduction in duty amount on interest calculation. The appellant argued that even if duty is reduced, interest should be calculated from the original determination date. Conversely, the respondent contended that interest should be based on the revised duty amount post remand. The court referred to precedents and explained that interest calculation should align with the final duty amount determined after remand, and if duty is paid within the specified period from the revised determination, interest is not applicable.

3. The third issue addresses the date from which interest is chargeable in de-novo proceedings. The appellant claimed that interest should be charged from the original adjudication order date, while the respondent argued for interest to be levied from the issuance of adjudication orders in de-novo proceedings. The court clarified that interest is chargeable based on the final duty amount determined after remand, and if duty is paid within the prescribed time from the revised determination, interest is not justified.

4. The final issue concerns the entitlement of revenue to claim duty. The appellant sought to establish the liability of the respondent to pay duty, while the respondent highlighted the remand for fresh determination of duty amount. The court examined the facts and concluded that as the duty amount was re-calculated post remand, interest should be calculated based on the revised duty amount, and the appellant's claim for interest from the original determination date was not justified.

In conclusion, the court dismissed the appeal, stating that no substantial question of law arose in the case, and upheld the principles regarding interest calculation under Section 11AA of the Central Excise Act, 1944, in situations involving remand for fresh assessment of duty amounts.