THIRD MEMBER ON REFERENCE : SHRI M.V. RAVINDRAN, MEMBER (J) MAJORITY ORDER : MS. ARCHANA WADHWA, MEMBER (J) AND SHRI B.S.V. MURTHY, MEMBER (T) Vs. COMMISSIONER OF CENTRAL EXCISE, VADODARA

JUDGEMENT

(1.) THE appellant cleared Absonals San Resin to their own factory located at Moxi and Nandesari. It was found by evenue that the assessable value adopted by them it had not been worked out at 115% cost of the production duly certified by Cost Accountant. The differential duty worked out to Rs. 26,90,980/ - which the appellant deposited in January 2003. Correctness of demand and payment is not being disputed. The only issue involved is whether they are required to pay interest in terms of provisions of Section 11AB of CEA, 1944 for delayed payment of duty.

(2.) SHOW cause notice was issued to them on 8 -7 -2005 which culminated in confirmation of interest at the Commissioner (Appeal)s level whose order has been impugned in this appeal.

(3.) THE appellants main contention is that the duty paid was not determined under sub -section (2) of Section 11A and as such provisions of Section 11AB are not attracted. However, we find that this contention does not have any merit in view of Tribunals decision in Gujarat State Fertilizers and Chemicals Ltd. v. C.C.E. Vadodara - 2007 (82) RLT 510 (CESTAT - Ahmedabad) = 2007 (218) E.L.T. 238 (Tri. - Ahmd.) wherein it was held that even where the duty paid prior to issuance of show cause notice, interest in terms of provisions of Section 11AB is leviable. Further, Section 11AB clearly provides as to whether duty is paid under sub -section (2) or sub -section (2B) of Section 11A, interest is leviable. Appellant contend that interest is of return or compensation for the use or retention of anothers money. In this case since differential duty paid is available as credit immediately to the Revenue, the entire exercise is revenue neutral. Learned advocate on behalf of the appellant has cited Mitras Legal and Commercial Dictionary, Fifth edition. In support of his contention interest is only compensation and any revenue neutral situation is not chargeable. Further, learned advocate also submitted that whenever the factum of revenue neutrality was accepted by Court, the entire demand proceedings were held to be unsustainable. When the demand of principal amount itself is quashed, the demand of interest which is an appendage or accessory to the principal will also stand quashed as held in the following cases :