2017 (9) TMI 988 - AT - Central Excise

Liability of interest - period from November 1996 to March 1999 - Section 11AB of the CEA, 1944 - Held that - CBEC vide Circular No. 655/46/2002-CEX dated 26.06.2002 clarified Section 11AB(2) has been substituted w.e.f. 11.05.2001 by the Finance Act, 2001, making it now very clear that Section 11AB will apply only to cases where duty had become payable or ought to have been paid after 11.05.2001 - the demand of duty was raised prior to 11.05.2001, and therefore, the demand of interest under Section 11AB cannot be sustained - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of duty, imposition of penalty, recovery of interest under Section 11AB of the Central Excise Act, 1944.

Analysis:

Demand of Duty and Imposition of Penalty:
The appellants, engaged in the manufacture of Iron & Steel products, received a Show Cause Notice proposing demand of duty and penalty for the period from November 1996 to November 1998. The Tribunal upheld the demand of duty & penalty and remanded the matter to the Adjudicating Authority for the demand of interest. The Commissioner confirmed the recovery of interest at the appropriate rate under Section 11AB of the Central Excise Act, 1944. The appellant filed an appeal challenging this decision.

Recovery of Interest under Section 11AB:
The Tribunal found that the demand of interest required reconsideration by the adjudicating authority as the demand was made without mentioning any specific Section of the Central Excise Act. The appellants had not raised any contentions regarding the demand of interest before the adjudicating authority. The Ld. Counsels for the appellant referred to various case laws to support their argument, highlighting the provisions of Section 11AB of the Act, 1944. They also referenced a circular clarifying that Section 11AB applies only to cases where duty became payable after a specific date. The Tribunal, following the circular, held that interest under Section 11AB is liable to be paid after the specified date, and not for demands raised prior to it.

Judicial Precedents and Interpretation of Section 11AB:
The Tribunal cited various judicial precedents to support its decision regarding the application of interest under Section 11AB. The decisions emphasized that interest under Section 11AB is applicable only for demands arising after a particular date mentioned in the Finance Act, 2001. The Tribunal differentiated cases where interest was levied for demands payable after the specified date from cases involving demands raised prior to it. The Tribunal also noted that recent Supreme Court judgments were not directly applicable to the case at hand, as they pertained to demands payable after the specified date.

Conclusion:
The Tribunal, considering the facts of the case, set aside the demand of interest under Section 11AB as the demand of duty was raised prior to the specified date mentioned in the Finance Act, 2001. Consequently, the appeal filed by the appellant was allowed, and the demand of interest was overturned. The judgment was pronounced on 25.08.2017 by Shri P. K. Choudhary, Hon’ble Judicial Member of the Appellate Tribunal CESTAT KOLKATA.