2004 (7) TMI 478 - AT - Central Excise

Summary

Issues:
1. Liability to pay penalty at the rate of 100% on the entire excise duty under Section 11AC.
2. Liability to pay interest on the entire excise duty under Section 11AB of the Central Excise Act, 1944.

Analysis:
Issue 1: The main question in this appeal was whether the appellant is liable to pay penalty at the rate of 100% on the entire excise duty under Section 11AC. The appellant argued that the respondent had not paid interest under Section 11AC proviso, making them liable to pay the entire penalty and interest. However, the respondent contended that they had already deposited the entire duty and 25% penalty before the duty liability was determined. The respondent argued that they were not obligated to pay more than 25% as a penalty of the duty amount. The Tribunal noted that the duty and penalty were paid before the duty determination, and as per precedent, when duty is paid before the notice is issued, penalty and interest are not applicable. The Tribunal cited a relevant case to support this position. Ultimately, the Tribunal found no merit in the appellant's submissions and dismissed the appeal.

Issue 2: The second issue was the liability to pay interest on the entire excise duty under Section 11AB of the Central Excise Act, 1944. The Tribunal examined the timeline of payments made by the respondent in response to the show cause notice. It was observed that the entire duty, along with 25% penalty, was paid within one month of the notice issuance. The duty liability was determined after the payment was made, and the interest could only be charged post-determination of duty. Since the duty had been paid before the determination, and a significant amount was deposited even before the notice was issued, the Tribunal held that interest was not chargeable. The Tribunal's decision was influenced by the fact that the duty had been paid before the notice, aligning with the precedent that penalty and interest are not applicable in such cases. Consequently, the appeal was dismissed.

In conclusion, the Tribunal dismissed the appeal, ruling in favor of the respondent based on the legal principles surrounding the payment of duty, penalty, and interest under the Central Excise Act, 1944.