2005 (7) TMI 406 - AT - Central Excise

Summary

Issues:

1. Stay application based on merits covered by Larger Bench decision.
2. Validity of penalty imposed on appellants.
3. Demand of differential interest and calculation discrepancies.

Issue 1: Stay application based on merits covered by Larger Bench decision

The Appellate Tribunal, CESTAT, New Delhi allowed the stay application as the appellants had a strong case on merits, which was already covered in their favor by a Larger Bench decision of the Tribunal. The issue involved in the appeal was related to the imposition of penalty on the appellants, and based on the precedent set by the Larger Bench decision, the stay application was granted.

Issue 2: Validity of penalty imposed on appellants

The appeal was filed by the appellants against the penalty imposed on them for failing to discharge their duty liability under the fortnightly scheme. Although the duty amount along with interest was paid by the appellants much before the issuance of the show cause notice, the penalty was still imposed. Citing the precedent set by the Larger Bench decision, it was established that when duty is paid before the show cause notice, neither penalty under Section 11AC nor interest under Section 11AB can be imposed. Therefore, the penalty imposed on the appellants was deemed invalid as per the settled position of law.

Issue 3: Demand of differential interest and calculation discrepancies

The demand for differential interest was confirmed against the appellants, even though they had already deposited interest along with duty before the show cause notice was issued. The Tribunal found that the demand for interest at a rate higher than 15% was not in accordance with law, as a notification had reduced the interest rate to 15%. The Commissioner's calculation of interest at a flat rate of 24% was deemed incorrect, and the demand for the differential amount of interest was set aside. The interest already deposited by the appellants was considered sufficient, and no additional amount of interest was deemed payable by them. Consequently, the impugned order regarding the imposition of penalty and demand of differential interest was set aside, and the appeal of the appellants was allowed with consequential relief as per law.

This detailed analysis of the legal judgment by the Appellate Tribunal, CESTAT, New Delhi highlights the issues of the stay application, validity of penalty, and demand of differential interest, providing a comprehensive overview of the decision and the legal reasoning behind it.