2017 (10) TMI 337 - AT - Central Excise

Liability of interest u/s 11AA of the CEA - case of appellant is that the learned Commissioner (A) has wrongly demanded the interest because when the differential duty payable was determined, Section 11AA was not in existence and hence no interest is payable on the differential duty paid by KMMCL on 30.10.1999 - Circular No.655/46/2002-CX dated 26.6.2002 - Held that - Section 11AA was brought to the statute on 26.5.1995 and as per the proviso to the said Section as interpreted by the High Court of Gujarat in the case of GUJARAT NARMADA VALLEY FERTILIZERS CO. LTD. AND 1 Versus UNION OF INDIA AND 1 2016 (10) TMI 276 - GUJARAT HIGH COURT that it has retrospective application - the Hon ble High Court has also considered the Board Circular No.655/46/2002 dated 26.8.2002 which was issued specifically in the background of Section 11AB of the Act. Neither the Circular was meant to cover Section 11AA nor the language used in Section 11AA would permit to apply such a clarification which was meant for Section 11AB of the Act - demand of interest upheld - appeal dismissed - decided against appellant.

Summary

Issues: Liability to pay interest under Section 11AA of the Central Excise Act

Analysis:
The judgment involves two appeals filed by different companies on the issue of liability to pay interest under Section 11AA of the Central Excise Act. The appeals were based on duty recovery proceedings initiated against one of the companies, which led to a demand notice for interest on the differential duty. The appellant argued that Section 11AA was not in existence when the duty was determined, and therefore, no interest should be payable retrospectively. The appellant relied on various case laws to support this argument. On the other hand, the respondent defended the demand for interest, citing a High Court judgment that interpreted Section 11AA to have retrospective application. The respondent also referred to a Tribunal decision holding that interest is payable under Section 11AA. After considering both parties' submissions and the High Court's interpretation, the Tribunal found that Section 11AA has retrospective applicability. The judgment highlighted the High Court's findings, emphasizing that the proviso to Section 11AA indicates a clear intention for retrospective application. The Tribunal also noted that a Board Circular related to a different section of the Act did not apply to Section 11AA. Consequently, the Tribunal upheld the demand for interest, dismissing both appeals.

This detailed analysis of the judgment showcases the arguments presented by both parties, the legal interpretations relied upon, and the Tribunal's reasoning in determining the liability to pay interest under Section 11AA of the Central Excise Act.