The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the department cannot deduct and adjust or charge any interest which was neither proposed in the show cause notice nor imposed in the Order-in-Original by the Adjudicating Authority.
The bench of Ajay Sharma (Judicial Member) has observed that when during the relevant time there was no provision in the statute about charging of interest and when there is no proposal in the show cause notice or in the Order-in-Original confirming the demand, the department deduct and adjust the same from the amount to be refunded.
The appellant/assessee is engaged in manufacturing sugar confectionery in their factory. A case of clubbing of the clearances was booked on the appellant and it was proposed that clearance of other independent unit were to be clubbed with the appellant.
A show cause notice was issued to the appellant for the period January, 1991 to October, 1993 and demand was confirmed by the Order-in-Original dated 24.1.1996 by which Central Excise duty of Rs.4,54,435/- with penalties was confirmed.
Neither any interest under section 11AA was proposed in the show cause notice, as the same was inserted in the statute only w.e.f. 23.5.1995, nor was it imposed by the adjudicating authority in the Order-in-Original dated 24.1.1996.
The issue raised was whether the appellant is liable to pay interest under Section 11AA of the Central Excise Act, 1994 when neither the show cause notice nor the adjudication order therein propose levy of interest?
The tribunal has held that the recovery of any sum without there being any proposal in the show cause notice or adjudication order therein, is totally illegal and unsustainable. No amount can be charged without there being any authority of law.
Case Details
Case Title: Harnik Food Industries Versus Commissioner of Central Excise, Pune I
Case No.: Excise Appeal No. 500 of 2012
Date: 20-12-2024
Counsel For Appellant: Stebin Mathew
Counsel For Respondent: C. S. Vinod
