The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that no interest demand can be made in absence of condition precedent under Section 11AA of Central Excise Act, 1944.
The appellant in the present case is M/s AFT Tobacco Pvt Ltd.
The appeal has been filed against order confirming the demand of interest on late payment of National Calamity Contingent Duty (NCCD) for the period July, 2017 to July, 2019. The appellant could not deposit NCCD on time due to problem faced by it, due to technical glitches on the Government portal.The appellant had no other way to deposit NCCD, as the law requires to deposit the duty of NCCD by way of electronic mode only.
Due to inaction and sloppiness on the part of the Revenue the issue remained pending for a long time and the appellant was prevented in depositing the amount of NCCD. Subsequently, when the issue was resolved in part, the appellant immediately deposited NCCD and gave intimation to the Revenue.
However, the Department required the appellant to deposit interest for delayed deposit of NCCD. As the appellant disputed liability to interest, the Department issued show cause notice for the amount of interest and proposing penalty, alleging fraud, suppression.
The Counsel for the appellant contended that the show cause notice itself issued under Section 11A(4) is bad. There being no condition precedent available for the same.Further, admittedly the appellant had no other way to deposit the amount of NCCD as the law mandates only through online portal. Thus, Revenue could not take advantage of its wrong doing by levy of interest. The appellant is being practically penalised for no fault of theirs.
The Tribunal of Anil Choudhary, Member (Judicial) observed that “Here both the conditions are not available to Revenue as admittedly neither there is any determination of duty liability of NCCD under Section 11A, nor there is voluntary default in deposit of the amount of NCCD. In absence of condition precedent in Section 11AA of the Central Excise Act, I hold that no interest can be demanded from the appellant –assessee.”
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