2008 (6) TMI 146 - AT - Central Excise

Supreme Court Upholds Revenue's Interest Liability Decision in Central Excise Case

FUTURA FIBRES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI

The apex Court ruled in favor of the Revenue in 2004, upholding the interest liability on duty demand under Section 11AA of the Central Excise Act, 1944. ... Delay in payment of duty – relevant date for calculating interest liability – In the instant case the liability has not been revised by any authority. Only the dispute has been decided in favour of Revenue by apex Court. Therefore, the interest applicable has to be computed with reference to the date of determination of duty liability by original authority read with proviso to the S. 11AA – but revenue is liable to pay interest for delayed grant of rebate – appeal of assessee is partly allowed Issues:1. Determination of interest liability on a demand made by the Assistant Commissioner in January 1995.2. Eligibility of the appellant for exemption on Polyester stable fibre from payment of duty.3. Computation of interest for delayed payment of duty.4. Claim for interest on late return of pre-deposit and delayed refund.Analysis:Issue 1: Determination of interest liability on a demand made in January 1995The appeals challenge the method of determining interest liability on a demand made by the Assistant Commissioner in January 1995. The dispute arose from the eligibility of the appellant for an exemption on Polyester stable fibre from duty payment. The Tribunal vacated the original authority's decision, but the apex Court ruled in favor of the Revenue in 2004. The department sought to recover interest on the duty demand under Section 11AA of the Central Excise Act, 1944. The impugned order found the computation of interest by the original authority to be incorrect and remanded the matter for requantification.Issue 2: Eligibility for exemption on Polyester stable fibreThe appellant's eligibility for an exemption on Polyester stable fibre was the core of the dispute. The original authority's decision was vacated by the Tribunal but affirmed by the Commissioner (Appeals) until the apex Court's judgment favored the Revenue in 2004. The appeals primarily contested the interest calculation based on the determination of duty liability and the subsequent appellate decisions.Issue 3: Computation of interest for delayed payment of dutyThe appellant argued that interest liability should be determined only after the final resolution of the dispute. The Explanations to Section 11AA were invoked to support this argument, emphasizing that interest is payable based on variations in duty liability. The appellant's claim for interest on pre-deposit and delayed refund was not addressed in the impugned order, leading to a further contention regarding interest for the delayed return of the pre-deposit and delayed payment of the rebate claim.Issue 4: Claim for interest on late return of pre-deposit and delayed refundThe appellant claimed interest on the late return of pre-deposit and delayed refund, citing relevant case law and decisions. The lower appellate authority and the ld. SDR argued that interest liability should be reckoned from the date of the original authority's order. The Tribunal rejected the appellant's argument regarding the relevant date for calculating interest liability, emphasizing the importance of the original authority's determination in such cases.In conclusion, the Tribunal partly allowed the appeals by remanding the matter for quantifying the interest liability of the appellant in accordance with the interest on pre-deposit amounts and the delayed grant of rebate. The judgment highlighted the significance of the original authority's order in determining interest liability and upheld the appellant's entitlement to interest for specific delays as per relevant legal provisions and judicial precedents.