2008 (9) TMI 532 - AT - Central Excise

Issues Involved:
1. Eligibility for refund under Notification No. 32/99-C.E.
2. Failure to deposit duty for specified periods.
3. Retrospective amendment of Notification No. 32/99-C.E. by Section 154 of the Finance Act, 2003.
4. Confirmation of demand without a hearing.
5. Applicability of interest on unpaid duty.

Issue-wise Detailed Analysis:

1. Eligibility for Refund under Notification No. 32/99-C.E.:
The Appellant claimed exemption from Central Excise duty under Notification No. 32/99-C.E. dated 8-7-1999 and sought refunds for duty paid. The learned Commissioner of Central Excise, Shillong, held that due to the retrospective amendment of the notification via Section 154 of the Finance Act, 2003, no refund was due to any assessee manufacturing tobacco products. Consequently, the entire refund amount availed by the assessee was deemed recoverable along with interest.

2. Failure to Deposit Duty for Specified Periods:
The Department noticed that the Appellant failed to deposit an aggregate duty amount of Rs. 2,15,48,160/- for both fortnights of August 2000 and the first fortnight of September 2000. The adjudicating authority directed the recovery of this amount with interest, invoking Section 11A of the Central Excise Act, 1944.

3. Retrospective Amendment of Notification No. 32/99-C.E. by Section 154 of the Finance Act, 2003:
The Finance Bill, 2003, amended Notification No. 32/99-C.E. retrospectively, denying the exemption to Pan Masala containing tobacco from 8-7-1999 and other products under Chapter 24 from 1-3-2001. This amendment was upheld by the Hon'ble Supreme Court in R.C. Tobacco Pvt. Ltd. v. Union of India, affirming that the legislature could retrospectively withdraw exemptions.

4. Confirmation of Demand without a Hearing:
The Appellant argued that the learned Adjudicating Authority confirmed the demand without affording an opportunity for a hearing, which was procedurally incorrect. However, the adjudicating authority relied on the Supreme Court's decision in R.C. Tobacco's case, which validated the retrospective withdrawal of exemptions and the subsequent recovery of dues.

5. Applicability of Interest on Unpaid Duty:
The adjudicating authority confirmed that interest was leviable on the unpaid duty amount of Rs. 2,15,48,160/- under Section 11AB of the Central Excise Act, 1944. The retrospective amendment under Section 154(4) of the Finance Act, 2003, mandated the recovery of duty with interest, reinforcing that the interest was payable from the date of default.

Conclusion:
The Tribunal, after extensive arguments and record examination, upheld the adjudicating authority's decision. The appeal was dismissed, confirming that the Appellant was not entitled to the refund and was liable for the unpaid duty with applicable interest. The retrospective amendment under Section 154 of the Finance Act, 2003, was deemed valid, and the recovery of duties and interest was justified. The stay application was also disposed of accordingly.

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