2004 (3) TMI 534 - AT - Central Excise

Summary

Issues:
Demand of interest on duty for a specific period and imposition of penalty on a Public Sector Undertaking.

Analysis:
1. The appeal was filed against a demand of interest on duty for a particular period and a penalty imposed on a Public Sector Undertaking. The appellant had cleared excisable goods to the West Bengal State Electricity Board without payment of duty, claiming exemption under a specific notification. A show-cause notice was issued demanding duty, interest, and penalty. The appellant paid the duty but contested the interest and penalty.

2. The Commissioner ordered recovery of interest and imposed a penalty. The appellant argued that the amended Section 11AB, allowing interest on unpaid duty irrespective of fraud, collusion, etc., was wrongly applied retrospectively. The Tribunal agreed, stating the amendment did not have retrospective effect. As the show cause notice did not allege fraud, collusion, suppression, or misstatement, interest under Section 11AB was deemed illegal for the period in question.

3. The Department argued citing a Tribunal decision that interest was payable under Section 11AB from a later date, regardless of fraud. However, this decision was deemed irrelevant to the case's disputed period. On the penalty issue, the appellant contended that non-payment was not willful but based on a genuine belief in exemption eligibility. The appellant also argued that the penalty rules invoked were not applicable during the dispute period.

4. The Commissioner's decision to penalize the appellant under Rule 173Q was found to be incorrect as Rule 173Q was not in force during the dispute period. Additionally, Rule 25 of the Central Excise (No. 2) Rules, 2001 was not invoked. Consequently, the penalty was vacated, and the demand for interest was set aside. The appeal was allowed, overturning the interest and penalty imposed on the Public Sector Undertaking.