2018 (3) TMI 548 - AT - Central Excise

100% EOU - Liability of interest - Section 11AB of CEA, 1944 - Held that - undisputedly, the appellant accepting the liability of Spl CVD of 4% not paid at time of de-bonding as on 07.10.2009 of their 100% EOU, discharged the same on 31.3.2011. They resisted discharging of interest on the short paid amount on the ground that no formal SCN was issued in confirming/recovery of the amount short paid - even though the duty is voluntarily paid being not paid at the time of de-bonding, voluntarily as per Sub-scion (2B) of Sec 11A, interest is required to paid for the period of default as mentioned in the said provision - appeal dismissed - decided against appellant.

Summary

Issues:
- Liability for short payment of Special CVD during de-bonding of EOU
- Recovery of interest under Sec. 11AB of CEA, 1944
- Applicability of penalty
- Interpretation of relevant legal provisions

Analysis:
1. Liability for Short Payment of Special CVD: The appellant had short paid Special CVD @4% during the de-bonding of the EOU. The jurisdictional Range Superintendent directed them to pay the amount, which they did later. The issue arose whether interest was payable on the amount paid voluntarily by the appellant. The appellant argued that no interest should be paid as the amount was paid voluntarily and the demand was issued against the domestic unit post de-bonding. The appellant referred to a judgment by the Karnataka High Court to support their contention.

2. Recovery of Interest under Sec. 11AB of CEA, 1944: The Revenue contended that interest is payable under Sec. 11AB of CEA, 1944 regardless of whether the duty was recovered through adjudication or paid voluntarily. The appellant resisted the payment of interest, claiming that no formal show cause notice was issued for the recovery of the short-paid amount. The Tribunal analyzed Sec. 11AB of CEA, 1944, which mandates the payment of interest on delayed duty payment, even if paid voluntarily under Sub-section (2B) of Sec. 11A.

3. Applicability of Penalty: The Commissioner (Appeals) partially allowed the appellant's appeal by setting aside the penalty but confirmed the recovery of interest. The Tribunal upheld the decision to recover interest but dismissed the appeal regarding the penalty. The judgment emphasized the requirement to pay interest on delayed duty payment, as per the provisions of Sec. 11AB of CEA, 1944.

4. Interpretation of Relevant Legal Provisions: The Tribunal highlighted the provision of Sec. 11AB of CEA, 1944, which specifies the liability to pay interest on delayed duty payment. The judgment clarified that even if the duty is voluntarily paid after being short-paid, interest is still required to be paid for the period of default as stipulated in the legal provision. The Tribunal upheld the impugned order, emphasizing the mandatory nature of paying interest on delayed duty payment under the law.

In conclusion, the judgment by the Appellate Tribunal CESTAT AHMEDABAD upheld the recovery of interest under Sec. 11AB of CEA, 1944 on the short-paid duty amount, emphasizing the legal obligation to pay interest on delayed duty payment even if paid voluntarily.