Madras High Court Restrains Dept. From Appropriating Interest Liability Against Eicher Motors Until Matter Is Taken Up By Appellate Court

The Madras High Court has restrained the department from appropriating interest liability against Eicher Motors until the matter is taken up by the appellate court.

The bench of Justice Senthilkumar Ramamoorthy has observed that since an appeal has been filed against the order of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) with regard to the imposition of interest on the sum of Rs. 49,00,000 and the appeal is pending consideration, it is just and appropriate to provide protection to the petitioner until such an appeal is taken up.

The petitioner/assessee, Eicher Motors, is a Chennai unit of Royal Enfield. The assessee has challenged a show cause notice. The proceedings were initiated under the Central Excise Act, 1944, against the petitioner. In relation thereto, an order was issued. The order was carried out in appeal, and eventually the CESTAT disposed of the matter. In terms of order, the respondents succeeded to the extent of a claim of Rs. 49,00,000 with interest.

The petitioner has filed a civil miscellaneous appeal against such an order before this Court insofar as it relates to the liability to pay interest on the sum of Rs. 49,00,000, but the appeal is yet to be numbered on account of the pending application for condonation of delay.

The assessee referred to Section 11AB of the Central Excise Act and pointed out that the provision came into effect on May 11, 2001. The sub-section (2) thereof makes it abundantly clear that sub-section (1) would not apply to cases where duty becomes payable or ought to have been paid before the date on which subsection (1) came into force. By virtue of sub-section (2), sub-section (1) is inapplicable to the claim for interest by the respondents. On account of the order of the CESTAT, the first respondent would merely follow the order of the CESTAT, and the petitioner would have no meaningful opportunity to show cause.

The court directed that the petitioner reply to the show cause notice, but the first respondent is restrained from issuing any orders or from appropriating the interest liability from and out of the sum of Rs. 1.28 crore lying with the respondents until the matter is taken up by the appellate court. This will not stand in the way of the respondents appropriating the principal sum of Rs. 49,00,000 from the amounts lying with them.

The court further directed the petitioner to take all necessary measures to number and list the appeal within one month.

Counsel For Appellant: Vijay Narayan

Counsel For Respondent: Rajnish Pathiyil

Case Title: M/s.Eicher Motors Limited Versus The Assistant Commissioner of Central Tax and Central Excise

Citation: 2024 LiveLaw (Mad) 159

Case No.: W.P.No.9231 of 2024 and W.M.P.No.10269 of 2024

Click Here To Read The Order