2013 (2) TMI 313 - AT - Central Excise

Appeal Judgment Requires Timely Interest Payment

The appeal was disposed of with the direction for the respondents to pay interest within 30 days from the date of the order. The judgment upheld the ... Interest on delayed reversal of Cenvat credit - liability to pay interest under Section 11AB - applicability of interest from the date Section 11AB came into force - reversal of Cenvat credit under protest pending appeal - requirement to challenge demand before the proper forumInterest on delayed reversal of Cenvat credit - liability to pay interest under Section 11AB - applicability of interest from the date Section 11AB came into force - requirement to challenge demand before the proper forum - Respondents are liable to pay interest on delayed reversal of Cenvat credit for the period 12.5.2001 to 5.10.2001. - HELD THAT: - The Tribunal rejected the respondents' contention that reversal was not required because they had not challenged the confirmation of the credit-demand before the appropriate forum. Reliance was placed on the Supreme Court decision in CCE, Pune v. SKF India Limited holding that interest is payable for delayed payment. Noting that the provisions for payment of interest under Section 11AB took effect on 11.5.2001, the Tribunal held that interest is payable on the delayed reversal of Cenvat credit from 12.5.2001 up to 5.10.2001. The Tribunal therefore set aside the Commissioner (Appeals) order which had dropped the interest demand and directed payment of interest for the specified period.The appeal is allowed; respondents directed to pay interest for the period 12.5.2001 to 5.10.2001 within 30 days of communication of the order.Final Conclusion: The Tribunal allowed the Revenue's appeal and directed payment of interest on the delayed reversal of Cenvat credit from 12.5.2001 to 5.10.2001, relying on the commencement of Section 11AB and the Supreme Court authority that interest is payable for delayed payment. Issues: Appeal against dropping of interest demand by Commissioner (Appeals) based on delayed reversal of Cenvat Credit.Analysis:1. Issue of Interest Demand: The appellant, a manufacturer of excisable goods, cleared input as such and later reversed the Cenvat Credit availed on the input. The demand for interest was raised due to the delayed reversal of the credit. The Commissioner (Appeals) dropped the interest demand based on a Tribunal decision. The Revenue appealed against this decision.2. Contentions of the Parties: The Revenue argued that the Tribunal decision was reversed by the High Court, and as the liability was admitted, interest should be paid on the delayed reversal. On the other hand, the respondent contended that they were not required to reverse the credit based on a different Tribunal decision, and they reversed the credit under protest.3. Judicial Analysis: The Tribunal found the respondent's argument of not being required to reverse the credit unacceptable as they did not challenge the confirmation of the credit demand. Referring to a Supreme Court judgment, the Tribunal held that interest is payable for delayed payment as per Section 11AB. Therefore, the respondents were directed to pay interest for the period from 12.5.2001 to 5.10.2001.4. Conclusion: The appeal was disposed of with the direction for the respondents to pay interest within 30 days from the date of the order. The judgment upheld the principle that interest is payable for delayed payment as per legal provisions, emphasizing the importance of complying with such requirements in excise matters.