High Court dismisses appeal on interest levy under Central Excise Act

The High Court dismissed the appeal challenging the Tribunal's order on the levy of interest under Section 11AB of the Central Excise Act, 1944. The Court considered the appellant's argument against the respondent's pre-deposit of duty and the policy decision to reduce government litigation as per the circular issued by the Central Board of Excise and Customs. With the subject matter of the appeal exceeding the monetary limit specified in the circular, the Court held that the appeal lacked merit and was subsequently dismissed.

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Issues:
1. Appeal against order passed by the Tribunal regarding levy of interest under Section 11AB of the Central Excise Act, 1944.
2. Applicability of circular/instruction issued by the Central Board of Excise and Customs regarding monetary limits for departmental appeal before CESTAT and High Courts.

Analysis:
1. The High Court heard arguments from both parties regarding the levy of interest under Section 11AB of the Central Excise Act, 1944. The appellant contended that the respondent's pre-deposit of duty before the issuance of the show cause notice did not exempt them from paying interest. The Tribunal's decision was challenged by the appellant on these grounds. However, the respondent argued that a policy decision had been made by the Central Board of Excise and Customs to reduce government litigation, citing a circular/instruction issued in this regard. The respondent pointed out that the circular stated that no appeal should be filed in High Courts where the duty involved or total revenue, including fines or penalties, is Rs. 2,00,000/- or below.

2. The High Court considered the contentions of both parties and examined the material on record. It was noted that the respondent had indeed deposited the duty before the issuance of the show cause notice, which was not disputed. Referring to various decisions of different High Courts and specifically mentioning a case from the Bombay High Court, the High Court highlighted the importance of reducing litigations in indirect tax matters. The Court acknowledged the circular/instruction issued by the Central Board of Excise and Customs post the filing of the appeal, setting the monetary limit for departmental appeals. As the value of the subject matter of the appeal was Rs. 4,246/-, exceeding the limit specified in the circular, the Court held that the appeal lacked merit and subsequently dismissed it.

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