2014 (8) TMI 406 - AT - Central Excise

Tribunal clarifies interest start date on modified duty demands.

The Tribunal ruled that interest under Section 11AA of the Central Excise Act should commence after three months from the date of the final order when the ... Interest demand - Commissioner (Appeal) set aside the demand - Tribunal confirmed the demand - Date of commencement of interest charges - Whether in the facts and circumstances of the case, demand of interest under Section 11AA of the Act, 1944 would be commenced after the three months from Order-in-Original or after three months from Tribunal Final Order - non-payment of Additional Duty of Excise - Held that:- In pursuance of Section 35A(3) of the Act, 1944, the Commissioner (Appeals) is empowered confirming, modifying or annulling the decision or order of demand of duty as determined under Section 11A(2) of the Act, 1944. The word 'annal' as per The Chambers Dictionary, 12th Edition means 'to make null, to reduce to nothing, to abolish'. The word 'null' as per Dictionary means 'of no legal force, void, invalid, having no significance, amounting to nothing, non-existent. In case, the Commissioner (Appeals) is modifying the demand of duty as determined, the interest is payable as per Explanation I or II of Section 11AA. But, if the Commissioner (Appeals) is annulling the order, demand of duty is non-existent. Division Bench of the Tribunal in the case of LUCAS TVS Ltd. (2009 (12) TMI 828 - CESTAT CHENNAI) rejected the appeal filed by the Revenue on the same issue following the decision of Blue Star Ltd. (2009 (10) TMI 257 - BOMBAY HIGH COURT). In that case, the demands were set aside by the Commissioner (Appeals) vide order dated 20.06.1995. The Tribunal by order dated 24.01.1997 set aside the Order-in-Appeal and remanded the matter to Commissioner (Appeals). The demand was reconfirmed by the Commissioner (Appeals) vide order dated 26.12.2000 - Commissioner (Appeals) set aside the demand by Order-in-Appeal dated 12.05.1998. The Tribunal by final order dated 30 th May, 2003 redetermined the demand and modified the order of the Commissioner (Appeals). Appellants are liable to pay interest, if any, after three months from the date of the Tribunal's final order dated 30.05.2003 in terms of Section 11AA of the Central Excise Act, 1944 - Decided in favor of assessee. Issues:- Determination of demand of interest under Section 11AA of the Central Excise Act, 1944 after modifications by Commissioner (Appeals) and Tribunal.Analysis:1. The case involves appeals arising from a common order regarding the demand of duty for non-payment of Additional Duty of Excise on Grey Tyre Cord Warpsheets consumed captively in the manufacture of other products. The adjudicating authority confirmed the demand of duty, interest, and penalty. The Commissioner (Appeals) set aside the adjudication orders, which was appealed by the Revenue before the Tribunal. The Tribunal modified the order and confirmed the demand of duty on the intermediate product, Grey Tyre Cord Fabrics. Subsequently, interest was demanded by the Central Excise Superintendent, contested by the appellant.2. The appellant filed three refund claims, and the Assistant Commissioner adjusted the demand of interest against these refund claims. The Commissioner (Appeals) upheld this adjustment, leading to the appellant filing appeals before the Tribunal. The issue revolved around the commencement of interest calculation, with the appellant arguing that interest should arise after three months from the Tribunal's final order, while the Revenue contended that it should commence from the original adjudication order.3. The Tribunal analyzed the provisions of Section 11AA of the Act, emphasizing the significance of modifications by the Commissioner (Appeals) in determining the commencement of interest calculation. It was noted that if the Commissioner modifies the demand of duty, interest is payable as per Explanation I or II of Section 11AA. In this case, the Commissioner (Appeals) set aside the adjudication orders, and the Tribunal modified the order, confirming the demand on the intermediate product.4. The Tribunal referred to a previous case where a similar issue was addressed, highlighting that interest should commence after three months from the date of the Tribunal's final order when the demand of duty is modified. In line with this interpretation, the Tribunal held that interest for the appellants would be payable after three months from the date of the Tribunal's final order dated 30.05.2003 in accordance with Section 11AA of the Central Excise Act, 1944. The appeals filed by the appellants were allowed with consequential reliefs.5. The judgment provides a detailed analysis of the legal provisions and precedents to determine the commencement of interest calculation under Section 11AA in cases where the demand of duty is modified by appellate authorities. The decision clarifies the timeline for interest payment in situations where adjudication orders are set aside and modified by higher authorities, ensuring clarity on the application of statutory provisions in such scenarios.