- (1.) This petition seeks quashing of recovery notice dated 16-1-2008 (Annexure P-9) with regard to liability of the petitioner to pay interest on delayed payment of Central Excise Duty.
(2.) The petitioner manufactures spun yarn and on the allegation that it mis-stated about the raw material used in manufacturing goods, demand of duty under the provisions of Central Excise Act, 1944 was raised vide order dated 9-12-1992 (Annexure P-1). According to the Department, the petitioner was manufacturing man-made fibre and not spun yarn. The petitioner did not pay the amount and had the benefit of stay in its favour till 16-2-2006 when the matter was disposed of by the Hon'ble Supreme Court. After this order, vide letter dated 23-11-2007 (Annexure P-5), Superintendent, Central Excise Range called upon the petitioner to deposit the amount of duty with interest. The petitioner deposited the amount of duty on 29-11-2007 but did not pay interest. The department vide letter dated 4-12-2007 (Annexure P-6) again asked the petitioner to pay interest. The petitioner contested the said demand and finally vide impugned notice Annexure P-9, certificate of the amount of interest due was issued under the provisions of Customs (Attachment of Property of Defaulters for Recovery of Customs Dues) Rules, 1995. The petitioner deposited a part of the amount under protest and challenged the impugned notice in this petition.
(3.) Contention raised in the petition is that there was no demand of interest in the Order-in-Original (Annexure P- 1), nor the demand of interest was raised before the Tribunal. The respondent, for the first time, raised demand of interest in the year 2007. Reliance has been placed on judgment of Hon'ble Supreme Court in Commissioner of Trade Tax, Lucknow V/s. Kanhai Ram Thekedar, 2005 185 ELT 3. It was also submitted that the assessment period involved is 1983-84 and there was no provision for interest. Provisions for interest, for the first time, were inserted in the year 1995 by way of Section 11AA, which could not have any retrospective effect. According to Rule 8(3) of the Central Excise Rules, 2002 , w.e.f. 1-3-2002, liability of interest to be paid by the assessee shall not exceed the amount of duty which had not been paid by due date.;