Madras High Court Disallows CESTAT From Imposing Interest On Eicher Motors Until Matter Is Taken Up By Appellate Tribunal
Madras High Court Disallows CESTAT from Imposing Interest On Eicher Motors Until Matter is Taken up by Appellate Tribunal
The Chennai unit of the motorcycle manufacturing company Royal Enfield, had challenged the show-cause notice
The Madras High Court has restrained the tax department from appropriating interest liability against Eicher Motors until the appellate court deals with it.
The bench comprising Justice Senthilkumar Ramamoorthy observed that since an appeal was filed against the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) order on the imposition of interest on Rs.49,00,000 and the appeal was pending, it was appropriate to protect the petitioner.
The petitioner/assessee (Eicher Motors) is a Chennai unit of the motorcycle manufacturing company Royal Enfield.
The assessee challenged a show-cause notice. The proceedings were initiated against the petitioner under the Central Excise Act, 1944. The assessee filed an appeal, but the matter was disposed of by the CESTAT.
Later, the petitioner filed a civil miscellaneous appeal against the order before the high court on the liability to pay interest on Rs.49,00,000. However, the appeal is pending.
Referring to Section 11AB of the Central Excise Act, the assessee pointed out that the provision was effective from 11 May 2001. Therefore, sub-section (2) made it clear that sub-section (1) would not apply to cases where duty was payable or was to be paid before the date on which sub-section (1) came into force. Thus, because of sub-section (2), sub-section (1) was inapplicable to the claim for interest by the respondent. According to the CESTAT order, the first respondent would follow the order, and the petitioner would have no meaningful opportunity to show cause.
Thus, Justice Ramamoorthy advised that the petitioner must respond to the show-cause notice, but the first respondent was restrained from issuing any order and appropriating the interest liability from Rs.1.28 crore in its possession until the matter was taken up by the appellate court. He further directed the petitioner to take the necessary steps to list the appeal within a month.
