2005 (6) TMI 362 - AT - Central Excise

Summary

Issues:
Challenge to confirmation of interest under Section 11AB and penalty under Rule 25 of the CE Rules when duty and interest were pre-deposited before the issue of Show Cause Notice.

Analysis:

1. Confirmation of Interest and Penalty:
The appellants contested the confirmation of interest under Section 11AB and penalty under Rule 25 of the CE Rules despite pre-depositing the duty amounts along with interest at 13% before the issuance of the Show Cause Notice. The department sought an additional 2% interest, arguing that a total of 15% interest should be charged. Both authorities disagreed with the appellants' argument that further interest was unjustified when duty and interest were already paid. The Tribunal noted that the appellants had indeed paid the duty and 13% interest before the Show Cause Notice was issued. Citing legal precedents, including a Supreme Court case and High Court decisions, the Tribunal found that the demand for additional interest and penalty was not justified in this scenario. Consequently, the confirmation of differential interest at 2% and the imposition of penalty were deemed unsustainable, leading to the orders being set aside in favor of the appellants.

2. Legal Precedents and Bench Decisions:
The appellants' counsel referenced various legal precedents, including the Apex Court's decision in Rashtriya Ispat Nigam Limited v. CCE, Visakhapatnam and the Karnataka High Court's ruling in CCE, Mangalore v. Shree Krishna Pipe Industries. Additionally, the counsel highlighted a Larger Bench judgment in the case of CCE v. Machino Montell (I) Ltd. and numerous orders by the present Bench that granted relief in similar matters. These references played a crucial role in supporting the appellants' argument against the imposition of additional interest and penalty when the duty had been pre-deposited before the Show Cause Notice.

3. Conclusion:
After careful consideration of the facts and legal arguments presented, the Tribunal concluded that the confirmation of interest and penalty in this case was unwarranted. Given that the duty and interest had been paid prior to the issuance of the Show Cause Notice, the demand for additional interest and penalty was deemed unjustified. The Tribunal set aside the impugned orders, thereby allowing the appeal in favor of the appellants. This decision was pronounced in open court at the conclusion of the hearing, providing a favorable outcome for the appellants based on the established legal principles and precedents cited during the proceedings.