TaxTMI 
TaxTMI 
2009 (10) TMI 257
X X X X Extracts X X X X
X X X X Extracts X X X X
.... time being fixed by the Central Government, by notification in the Official Gazette on such duty from the date immediately after the expiry of the said period of three months till the date of payment of such duty: Provided that where a person chargeable with duty determined under sub-section (2) of Section 11A before the date on which the Finance Bill, 1995 receives the assent of the President, fails to pay such duty within three months, from such date, then, such person shall be liable to pay interest under this section from the date immediately after three months from such date, till the date of payment of such duty. Explanation 1.- Where the duty determined to be payable is reduced by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or, as the case may be, the Court, the date of such determination shall be the date on which an amount of duty is first determined to be payable. Explanation 2. - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), Appellate Tribunal, National Tax Tribunal or, as the case may be, the Court, the date of such determination shall be,- (a) for the amount of duty first ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...."In the result, we set aside the impugned order and remand the case to the jurisdictional Commissioner of Central Excise for fresh decision according to the above guidelines. He shall pass fresh orders after extending a reasonable opportunity to the assessees of being heard in their defence." 5. On the order of remand, the A.O., was pleased to pass the impugned order on 22nd March, 2002. By the impugned order duty was confirmed in the sum of Rs.35,15,930.80 paise and order of confiscation was passed with liberty to redeem on payment of fine of Rs.3.00 lakhs in lieu of confiscation. Penalty was imposed in the sum of Rs.8.00 lacs. 6. The petitioners on 17th July, 2002 paid the duty as well as fine and penalty through two separate T.R. Challans. 7. The order of the A.O., came to be reviewed by the C.B.E.C, under Section 35E(1) of the Act on 17th March, 2003. Pursuant to that order an appeal came to be filed, which, it is pointed out is still pending disposal before the CESTAT. 8. In the meantime, by communication of 26th June, 2008 the Superintendent demanded interest on the duty confirmed. The 1st petitioner by their communication of 18th July, 2008 replied, stating that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d in the form of interest by the assessee to the Government where any tax due is withheld for no fault of the Government. Reliance is placed in the judgment in the case of Central Provinces Manganese Ore Co. Ltd. v. Commissioner of Income Tax, 1986 (3) SCC 461 to contend that interest is compensatory. It is then contended that reliance placed by the petitioners on Circular No. 655/46/2002/CX dated 26th June, 2002 is misplaced as the same is not applicable on the facts and circumstances of the present case as the Circular deals with Section 11AB and not Section 11AA. Penalty under Section 11AB, it is set out, is penal in nature and not compensatory. For all the aforesaid reasons it is set out that the petition ought to be dismissed. 10. On behalf of the petitioners learned Counsel submits that the demand under Section 11AA is not sustainable as duty became payable only after 11th May, 2001. The order by the Commissioner dated 22nd March, 2002 is determination of duty payable under Section 11A(2) of the Central Excise Act. It is not duty determined to be payable which is either reduced or increased as contemplated under Explanations 1 and 2 of Section 11AA(1). It is then submitted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mere giving of show cause notice does not amount to demand and a demand may come into existence after the show cause notice has been adjudicated upon. On 15th May, 2001 there was no demand as the order had been set aside on 14th July, 2000 and the order of adjudication came to be passed only on 22nd March, 2002. In Voltas Limited v. Union of India, 1999 (112) E.L.T. 34 (Del.), the issue before the Delhi High Court was in respect of an order of pre-deposit which was set aside and whether the amount of pre-deposit could be retained. The learned Division Bench of the Delhi High Court was of the view that once an order of adjudication is set aside the Tribunal could not have ordered the amount of pre-deposit to be retained awaiting the order of adjudication. These support the contention of the petitioners that it is the final order of assessment which gives rise to the demand for interest if not payable within three months of the order of assessment. 14. A distinction is sought to be made between the demand by way of penalty and otherwise by the respondents. Reliance was firstly placed in the judgment of the Tribunal in Prabhat Zarda Factory Ltd. v. Commissioner of Central Excise, D....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and the matter was remanded for de novo determination. The first order was passed on 28th February, 2001 and the order of determination was made on 23rd September, 2005. Revenue demanded interest from 28th February, 2001. The assessee's contention was that interest would be payable after 23rd September, 2005 and as they had paid the amount the question of payment of interest did not arise. The contention of the assessee was upheld. Though these are orders of the Tribunal they were pointed out and we have referred to them to set out how the Tribunal has understood the issue. 16. On behalf of the petitioners learned Counsel also drew our attention to the judgment in Philips India Ltd. & Anr. v. Assistant Commissioner, Commercial Taxes, Calcutta and Ors., (2004) 10 SCC 436. In that case an appeal was preferred. The stay was granted. Certain amounts were directed to be deposited which were deposited. Ultimately in the appeal the order came to be passed directing recomputation on the basis set out in that judgment. In another Appeal the amount of tax was reduced. The respondent issued fresh demands. The question was whether the assessee could be treated as a defaulter and liable to p....