Chennai Petroleum Corporation Vs. Commissioner of Central Excise - Court Judgment

Excerpt:

.....normal period of limitation by holding that the allegation of suppression raised against the assessee by the department was not sustainable on the facts of the case.4. in the result, only the demand of duty for the normal period, amounting to rs. 77,35,903/- came to be sustained at the apex court level. the interest under section 11ab of the central excise act on the said amount of duty was paid by the assessee. the revenue's demand of interest on the amount of duty set aside by the apex court did not survive. for the period february, 1999 to april, 2001, the demands of duty confirmed against the assessee were also honoured by them as those demands were within the normal period of limitation. the party also paid interest under section 11ab on such amounts of duty paid during the pendency of their appeals before the commissioner (appeals) against the orders of the original authority. in the said appeals, learned commissioner (appeals) has sustained the decision of the original authority in relation to the demand of duty and the demand of interest.the present appeal is against the appellate commissioner's order.5. the chief argument of learned counsel today is that there can be.....

Judgment:

1. After examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, we take up the appeal.

2. The appellants are manufacturers of petroleum products. The lower authorities have demanded interest of over Rs. 3 crores from them for periods prior to May, 2001 in respect of duty paid on Residual Fuel Oil (RFO, for short). This demand of interest is in respect of demands of duty confirmed against the assessee by the original authority for different spells between December, 1993 and April, 2001. In respect of the demand so confirmed against the assessee for the period December, 1993 to January, 1999, a dispute had arisen, which eventually reached the apex court.

3. The Hon'ble Supreme Court vacated the demand for the period beyond the normal period of limitation by holding that the allegation of suppression raised against the assessee by the department was not sustainable on the facts of the case.

4. In the result, only the demand of duty for the normal period, amounting to Rs. 77,35,903/- came to be sustained at the apex court level. The interest under Section 11AB of the Central Excise Act on the said amount of duty was paid by the assessee. The Revenue's demand of interest on the amount of duty set aside by the apex court did not survive. For the period February, 1999 to April, 2001, the demands of duty confirmed against the assessee were also honoured by them as those demands were within the normal period of limitation. The party also paid interest under Section 11AB on such amounts of duty paid during the pendency of their appeals before the Commissioner (Appeals) against the orders of the original authority. In the said appeals, learned Commissioner (Appeals) has sustained the decision of the original authority in relation to the demand of duty and the demand of interest.

The present appeal is against the appellate Commissioner's order.

5. The Chief argument of learned Counsel today is that there can be no demand of interest under Section 11AB on the assessee in respect of any amount of duty paid by them for the period prior to May, 2001 inasmuch as Section 11AB, invoked by the lower authorities, was introduced in the Central Excise Act under the Finance Act, 2001 only with effect from 11.05.2001. This case of the assessee is squarely covered by Sub-section (2) of Section 11AB, which reads thus: The provisions of Sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President." The Finance Bill, 2001 received the President's assent on 11.05.2001. Learned Counsel has also cited the Tribunal's decision Union Air Products (P) Ltd. v. Commissioner of Central Excise, Cochin 2006 (76) R.L.T. 360 (CESTAT-Bang.), wherein the above legal position was reiterated and a demand of interest for the period prior to 11.05.2001 was vacated. We have considered the submissions of learned SDR also, which are a reiteration of the findings recorded in the impugned order.

6. Having found the legal provisions operating in favour of the assessee (appellant), we set aside the impugned order and allow this appeal.