STEEL KNIGHT CASTING Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellant was engaged in the manufacture of steel castings with the aid of electric furnace during the material period. They had cleared a quantity of 38.76 MTs of steel castings without payment of duty during the period from 22.5.1980 to 21.4.1982 claiming the benefit of an exemption notification. In adjudication of a show -cause notice, wherein duty was demanded in respect of such clearances, the original authority by order dated 26.11.1983 confirmed the demand of duty to the extent of Rs. 66,293/ -. The adjudicating authority also imposed a penalty of Rs. 5000/ -, after holding that the benefit of the said exemption notification was not admissible. The order of adjudication eventually came to be final and binding on the assessee. The assessee paid a part of the duty amount during the period February to December, 1985. The balance amount of duty (Rs. 32,000/ -) was paid only on 25.1.2007. Meanwhile, Section 11AA was enacted by Parliament with effect from 26.5.1995. The department invoked this provision of law for recovery of interest on the duty amount of Rs. 32,000/ - from 26.8.1995 to 25.1.2007. The show -cause notice issued in this connection was adjudicated upon by the Assistant Commissioner, who quantified the amount of interest at Rs. 66,738/ - and demanded the same. An appeal filed by the assessee against the Assistant Commissioner's order did not succeed. Hence the present appeal of the assessee.

(2.) AFTER hearing the learned Counsel for the appellant and the Ld J.D.R. for the respondent, I find that the short question to be considered in this case is whether, under Section 11AA of the Act, the appellant is liable to pay interest on the amount of duty paid on 25.1.2007 and, if so, to what extent. Section 11AA came into force on 26.5.1995 at time when an order of adjudication casting a duty liability on the appellant but not fully honoured by them was in force. An amount of Rs. 32,000/ - was remaining unpaid by the assessee when the above penal provision came into force. The said amount of duty was paid on 25.1.2007 only. Obviously, the mandatory provision of Section 11AA were in force against the assessee from 26.5.1995 till the date of payment of duty. However, in terms of the proviso to Section 11AA, an assessee, who defaulted payment of duty determined under Sub -section (2) of Section 11A before 26.5.1995, was liable to pay interest on such duty under Section 11AA from the date immediately after three months from 26.5.1995 till the date of actual payment of duty. This would mean that the appellant is liable to pay interest on the aforesaid amount of duty (Rs. 32,000/ -) for the period from 26.8.1995 to 25.1.2007. The decision to this effect taken by the lower authorities has only to be sustained.

(3.) IN the result, this appeal gets dismissed.