Commissioner of Central Excise Chennai IV Commissionerate, Chennai v Customs

Excise and Service Tax Appellate Tribunal South Zonal Bench, Chennai and another 1
FACTS:
This appeal by the Revenue is directed against the Final Order passed by the Customs,
Excise and Service Tax Appellate Tribunal, in the present case the respondent/assessee are
the manufacturers of headlamp assembly and motor vehicles part falling under Central Excise
Tariff heading No.8512 and 8705. The assessee has been availing Cenvat Credit on inputs
under CENVAT Credit Rules, 2002. During the period from April 2003 to March 2004, the
assessee removed inputs as such, on which Cenvat Credit was availed and the credit was not
reversed on the date of removal.This lead to a demand being issued to the assessee
demanding interest of Rs.67,349/- under Section 11AB of the Central Excise Act, 1944 on
the ground that if the duty of excise has not been paid or has been short paid, the person liable
to pay duty, has to pay interest on such belated payment.
Aggrieved by such order, the assessee preferred appeal before the Commissioner
(Appeals). The Commissioner (Appeals) held that the duty liability having been paid prior to
the issuance of show cause notice, the question of imposing penalty or demanding interest
does not arise. As against this order, the Department preferred appeal to the Tribunal and the
Tribunal dismissed the appeal on the ground that there is no enabling provision in the Statute
for recovering interest.
ISSUE:
Whether tribunal was right in holding that there was no provision in statue for enabling
recovery of interest in case of delay in reversal/payment of duty?

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2014 Indlaw MAD 142