2004 (12) TMI 434 - AT - Central Excise

Summary

Issues involved:
Challenge to imposition of penalty and demand of interest on duty.

Analysis:
In the present case, the Appellate Tribunal had to address the challenge raised by M/s. National Fertilizer Ltd. regarding the imposition of penalty and demand of interest on the duty. The main contention put forth by the Appellant was related to the interpretation of Notification No. 5/99-C.E., dated 28-2-1999, which provided for nil rate of duty on certain products intended for use as feed stock in the manufacture of fertilizers. The Appellant argued that they were following the Tribunal's decision in their own case, which allowed them to avail full exemption of duty on furnace oil used in generating steam for fertilizer production. However, a Supreme Court judgment in another case altered this interpretation, leading to the Department demanding duty, penalty, and interest from the Appellant for a specific period.

The Appellant's Advocate contended that no penalty should be imposed as the Appellant acted in accordance with the law prevailing during the relevant period based on the Tribunal's decision. Additionally, the Advocate argued that no interest under Section 11AB of the Central Excise Act should be payable, as there was no fraud, collusion, or wilful misstatement on the part of the Appellant. The Advocate relied on a previous decision in support of this argument.

On the other hand, the Departmental Representative argued that the law, as established in a previous Tribunal decision, did not allow for full exemption of duty on certain products used in fertilizer manufacture. Therefore, the Department asserted that penalty and interest were justified in this case.

After considering the arguments from both sides, the Tribunal noted that the law, as interpreted in the Appellant's own case by the Tribunal, allowed for the exemption of duty on the products in question during the relevant period. The Tribunal agreed with the Appellant's position that they were following the law as declared by the Tribunal until the Supreme Court's decision altered the interpretation. The Tribunal also observed that the Appellant had deposited the duty amount during a specific period. As the Appellant had acted in accordance with the Tribunal's decision, no penalty was deemed imposable. Furthermore, the Tribunal concluded that no interest under Section 11AB could be demanded from the Appellant as there was no fraud or suppression involved in the Appellant's actions. Consequently, the Tribunal set aside the penalty and the demand of interest, thereby allowing both appeals in favor of the Appellant.