Supreme Court upholds obligation to pay excise duty with interest at 12% under BIFR scheme

The Supreme Court dismissed the Petitioner's appeal, affirming the obligation to pay excise duty with interest at a rate not exceeding 12% per annum as per the sanctioned rehabilitation scheme outlined by BIFR. The Court ruled that the excise authorities could not demand interest exceeding the specified rate, holding the Petitioner liable for interest only at 12% per annum from a specified date. The decision clarified the interest rate to be paid by the Petitioner, with no costs imposed.

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Issues:
1. Dispute over excise duty payment on compressors
2. Show cause notice issued by excise authorities
3. Petitioner's appeal in Gujarat High Court
4. Demand of excise duty by Collector during court proceedings
5. Interim relief granted by Gujarat High Court
6. Withdrawal of writ petition for appeal to CEGAT
7. CEGAT's confirmation of excise duty demand
8. Petitioner's appeal to Supreme Court dismissed
9. Petitioner's obligation to pay excise duty with interest
10. Reference to BIFR for rehabilitation scheme
11. Sanctioned Scheme for payment of excise duty
12. Impugned demand order for interest by excise authorities
13. Rejection of Petitioner's representation against demand order
14. Interpretation of Section 11BB of the Act on interest rate
15. Contention on rate of interest by both parties
16. Decision on interest rate by the Court

Analysis:
1. The case involved a dispute between the Petitioner and excise authorities over the payment of excise duty on compressors, leading to a show cause notice issued in 1987.
2. The Petitioner appealed in the Gujarat High Court against the show cause notice, which was admitted for final hearing, granting interim relief to provide security instead of paying the demanded duty.
3. During the proceedings, the Collector of Central Excise adjudicated on the demand, confirming a duty of about Rs. 1.55 crores for a specific period.
4. The Petitioner withdrew the writ petition later to appeal before CEGAT, where the demand was upheld, with a reduced penalty, and interest at 12% per annum as directed by the Gujarat High Court.
5. Despite subsequent appeals and petitions, including a dismissal by the Supreme Court, the Petitioner was required to pay the excise duty with interest as per the Gujarat High Court's order.
6. Due to financial strain, the Petitioner sought rehabilitation through BIFR, resulting in a sanctioned scheme outlining the payment of dues, including excise duty with interest.
7. However, a subsequent demand order by the excise authorities claimed interest at a higher rate than previously agreed upon, leading to a representation by the Petitioner, which was rejected.
8. The Court analyzed Section 11BB of the Act and the parties' contentions regarding the interest rate, ultimately ruling that the Respondents cannot demand interest exceeding 12% per annum based on previous orders and agreements.
9. The Court held that the demand for interest at rates higher than 12% was unjustified, and the Petitioner was liable to pay interest only at 12% per annum from a specified date as per the sanctioned scheme approved by BIFR.
10. Consequently, the writ petition was allowed, and the Court clarified the interest rate to be paid by the Petitioner, with no costs imposed.

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