Tribunal rules no interest on duty if paid before notice, aligning with legal principles

KARNATAKA SOAPS & DETERGENTS LTD. Versus COMMR. OF C. EX., BANGALORE-III

KARNATAKA SOAPS & DETERGENTS LTD. Versus COMMR. OF C. EX., BANGALORE-III - 2005 (190) E.L.T. 103 (Tri. - Bang.) Issues:
1. Whether interest under Section 11AB is payable if the duty is paid before the issue of show cause notice.

The Appellate Tribunal CESTAT, Bangalore addressed the issue of interest payment in a ROM application filed concerning Final Order No. 855-856/2005. The counsel for the appellants argued that despite paying Central Excise duty amounting to Rs. 2,52,45,268 before the show cause notice, the Tribunal upheld the demand for interest. The counsel relied on legal precedents to support the contention that interest is not payable if duty is paid before the issuance of the notice. The Tribunal acknowledged the consistent application of this principle in previous cases and agreed with the appellants' view. Upon careful examination of the case records, the Tribunal found merit in the ROM application. Consequently, the Tribunal amended the final order, deleting the sentences upholding the interest demand and stating that since duty was paid before the notice, no interest is leviable. The appeal was partly allowed based on established case law on the matter.

The Tribunal's decision was based on the established legal principle that when duty is paid before the issuance of a show cause notice, no interest or penalty can be imposed. This principle was consistently followed by the Tribunal in previous cases, as highlighted by the counsel for the appellants. The Tribunal recognized the mistake in not considering this well-settled position in law in the initial final order. By rectifying this error, the Tribunal aligned the decision with the legal precedents and amended the order accordingly. The Tribunal's decision to allow the ROM application and partially allow the appeal was grounded in the application of established case law and legal principles regarding the payment of duty and interest in excise matters.