Case Note & Summary
The appellant, Indo Swiss Embroidery Industries Limited, is engaged in manufacturing embroidered grey fabrics classified under Chapter Sub Heading 5804.11 of the Central Excise Tariff Act, 1985. The Central Excise Department alleged incorrect classification and that the appellant was liable to pay Additional Duty of Excise (Textile & Textile Articles) at 15% instead of 8% from 20/08/1998. A show cause notice was issued, and the adjudicating authority confirmed the demand along with interest under Section 11AA of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the demand but set aside the interest. The Revenue appealed to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which restored the interest. The appellant filed this appeal under Section 35G of the Central Excise Act. The legal issue was whether interest could be levied under the Additional Duties of Excise (Textile & Textile Articles) Act, 1978, which does not contain any provision for interest. The appellant argued that Section 11AA of the Central Excise Act is not applicable to the ADE (T&TA) Act, as the latter is a separate enactment with its own machinery provisions. The respondent contended that Section 3(3) of the ADE (T&TA) Act incorporates the provisions of the Central Excise Act, including interest provisions. The Court analyzed Section 3(3) and found that it only incorporates provisions relating to levy and collection of additional duties, not all provisions of the Central Excise Act. Since the ADE (T&TA) Act does not have a specific provision for interest, no interest can be charged. The Court also noted that the Tribunal erred in holding that the appellant had not agitated the interest issue earlier, as it was a pure question of law. The appeal was allowed, and the order of the Tribunal regarding interest was set aside.
Headnote
A) Central Excise - Interest Liability - Absence of Charging Provision - Section 11AA of Central Excise Act, 1944 and Section 3(3) of Additional Duties of Excise (Textile & Textile Articles) Act, 1978 - The issue was whether interest can be levied on additional duty under the ADE (T&TA) Act when that Act does not contain any provision for interest. The Court held that Section 11AA of the Central Excise Act is not applicable to the ADE (T&TA) Act as the latter is a separate enactment with its own machinery provisions. Since the ADE (T&TA) Act does not provide for interest, no interest can be charged. The Tribunal's order confirming interest was set aside. (Paras 1-10) B) Central Excise - Appellate Tribunal - Scope of Appeal - Question of Law - Section 35G of Central Excise Act, 1944 - The Court considered whether the Tribunal erred in holding that the appellant had not agitated the interest issue earlier. The Court found that the issue of interest was a pure question of law and could be raised for the first time in appeal. The Tribunal's observation that the issue was not agitated was incorrect. (Paras 2-8)
Issue of Consideration
Whether the Appellate Tribunal was correct in holding that the appellant is liable to pay interest when there is no provision in law for charging interest under the Additional Duties of Excise (Textile & Textile Articles) Act, 1978.
Final Decision
Appeal allowed. The order of the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad dated 27.09.2013, insofar as it relates to interest, is set aside. No order as to costs.
Law Points
- Interest cannot be levied without specific statutory provision
- Section 11AA of Central Excise Act not applicable to ADE (T&TA) Act
- 1978
- Classification dispute under Central Excise Tariff Act
- 1985
