KWALITY ICE CREAM COMPANY Vs. UNION OF INDIA

JUDGEMENT

(1.) By way of this writ petition, the petitioners seek the quashing of the default notices of demand dated 04.08.2006 and 03.07.2006 and the demand letters dated 07.03.2006, 09.12.2005 and 19.10.2005. By virtue of the said letters, the respondents have demanded a sum of Rs. 24,05,332/- by way of interest on the demand of central excise duty of Rs. 75,16,661/-. We may point out that by virtue of an order-in-original dated 06.04.2000, a sum of Rs. 1,23,00,006/- was demanded by way of duty short paid. When the petitioner went in appeal before the Commissioner (Appeals), the said amount of duty was reduced to Rs. 75,16,661/- by his order dated 12.09.2001. It is relevant to mentioned that neither in the order-in-original nor in the appellate order was there any direction for payment of interest.

(2.) It is also the case of the petitioner that as the petitioner desired to close the matter, it had agreed to pay the amount of Rs. 75,16,661/- and it was under an understanding that the matter would be treated as closed and no further proceedings would take place in respect of the same. It is on this basis that the petitioner did not prefer any appeal before the Central Excise and Gold (Control) Appellate Tribunal. Thereafter, no action was taken by the respondents. However, after a lapse of about three years, the petitioner received a letter dated 10.11.2004, in which a demand of Rs. 24,05,332/-, which was described as differential duty, was raised. But, as the petitioner had explained that the entire amount of differential duty amounting to Rs. 75,16,661/- had been paid, it appears that the respondents did not pursue the demand towards differential duty any further. However, the department issued another letter dated 19.10.2005, wherein it demanded the said sum of Rs. 24,05,332/-, this time, towards the payment of interest on the differential duty of Rs. 75,16,661/-, purportedly under the provisions of Section 11AA of the Central Excise Act, 1944.

(3.) The short point that arises for consideration in this writ petition is whether the demand for payment of interest would be barred on account of delay and laches. The learned counsel for the petitioner submitted that the amount determined by the Assistant Commissioner in the order-in-original was ultimately reduced by the Commissioner (Appeals) to Rs. 75,16,661/- by virtue of the order dated 12.09.2001. The said amount was paid shortly thereafter on 23.10.2001 and thereafter a letter dated 24.10.2001 was sent to the Commissioner of Central Excise enclosing the challan dated 23.10.2001. The matter rested there and it is only after a lapse of over three years that the first letter, raising the demand of Rs. 24,05,332/-, was received by the petitioner which was also purportedly towards differential duty. However, as the petitioner had explained that the entire duty amount had been paid, the department issued the said letter dated 19.10.2005, demanding interest of Rs. 24,05,332/-. The learned counsel for the petitioner submitted that the demand for interest, even if the starting point is taken as the date of the order passed by the Commissioner (Appeals), that is, 12.09.2001, is highly belated inasmuch as the first demand for interest was made on 19.10.2005.