2020 (6) TMI 252 - AT - Central Excise

Interest on Rebate Claim - duty adjustment - whether the interest is payable on the duty adjustment issue? - HELD THAT - When Commissioner (Appeals) hold that while calculating the interest, could have been remanded the matter back to the adjudicating authority with open remand as appellant has challenged the issue of liability of interest itself before the adjudicating authority. In view of this, as held by the Commissioner (Appeals) the calculation of interest is in violation of the principles of natural justice. The matter is remanded back to the adjudicating authority to find out whether the appellant is liable to interest or not, thereafter, how much the interest is payable, if any - Appeal allowed by way of remand.

Summary

Issues involved:
- Challenge to observations made by the Commissioner (Appeals) in the impugned order regarding interest payable on duty adjustment issue.

Analysis:
1. Background and Facts:
The appellant, engaged in the manufacture of yarn and waste of man-made fiber, had availed sales tax incentives. Following amendments to Section 4 of the Central Excise Act, the appellant deposited certain amounts related to sales tax availed. Subsequently, rebate claims were filed for excise duty paid on raw materials and finished goods. The rebate claims were sanctioned after legal proceedings, but the Adjudicating authority sought to adjust interest payable by the appellant during the impugned period.

2. Commissioner (Appeals) Observations:
The Commissioner (Appeals) found that the appellant had paid outstanding central excise duty but not paid interest thereon. The manner of interest calculation was contested by the appellant, leading to a dispute. The Commissioner held that the adjustment of rebate claims against the disputed interest liability violated the principles of natural justice. While acknowledging the duty demand's finality and the adjustability of interest, the Commissioner directed a recalculation of interest to be paid by the appellant following due process.

3. Appellate Tribunal Decision:
The Appellate Tribunal, upon reviewing the Commissioner (Appeals) observations, agreed that the interest calculation was flawed and violated natural justice principles. The matter was remanded back to the adjudicating authority to determine the appellant's liability for interest and the correct amount payable, if any. The adjudicating authority was instructed to provide detailed information on the interest payable by the appellant during quantification.

4. Conclusion:
The appeals were disposed of by remanding the matter back to the adjudicating authority for a fresh determination of the interest payable by the appellant. The Appellate Tribunal emphasized the need for a correct calculation of interest and adherence to principles of natural justice in the process.

This detailed analysis of the judgment highlights the key issues, findings, and directives provided by the Commissioner (Appeals) and the Appellate Tribunal regarding the interest payable on the duty adjustment issue, ensuring a comprehensive understanding of the legal proceedings and decisions involved.