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2010 (1) TMI 988 - AT - Central Excise
Issues involved: Delayed payment of duty, refund claim, deduction of interest, interpretation of Notification No. 39/2001-C.E., liability under Section 11AB.
In this case, the Appellate Tribunal CESTAT AHMEDABAD considered the appeal regarding delayed payment of duty and subsequent refund claim by the appellants. The Department instructed the appellants to deposit interest for the delayed payment of duty before processing the refund claim. The appellants requested the Department to deduct the interest amount while reserving the right to contest it. The lower authorities upheld the deduction of interest, leading to the appeal. The main argument presented by the advocate for the appellants was based on Notification No. 39/2001, which exempts goods from payment of duty from the PLA. The advocate contended that since the exemption notification results in a revenue-neutral situation for the government, the appellants should not be liable to pay interest. Additionally, it was argued that interest under Section 11AB can only be demanded when there is an amount due to be paid under Section 11A, which was not the case due to the exemption notification. Upon considering the submissions, the Tribunal referred to the relevant portion of Notification No. 39/2001, which indicated that the exemption granted is equivalent to the duty paid by the manufacturer, excluding Cenvat credit. The Tribunal concluded that the appellant is required to pay duty first, as there is no exemption from paying duty. Failure to discharge duty within the specified time attracts liability for consequences, including payment of interest. The Tribunal emphasized that the obligation to pay interest arises when duty is not paid within the stipulated time, regardless of whether a refund is granted. The deduction of interest from the refund claim does not alter the nature of the liability under Section 11AB. The Tribunal highlighted that the demand for interest under Section 11AB is a statutory obligation with no time limit, which must be fulfilled. In light of the above analysis, the Tribunal found no merits in the appeals and consequently rejected all the appeals.
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