2005 (11) TMI 269 - AT - Central Excise

Summary

Issues:
Non-imposition of penal interest under Section 11AB of the Central Excise Act, 1944.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Kolkata pertained to the non-imposition of penal interest under Section 11AB of the Central Excise Act, 1944. The Revenue contended that the respondent-company had availed credit without a TR-6 Challan, which they argued was a fraudulent way of seeking clearances. On the other hand, the respondent's advocate argued that the company had deposited the duty amount on their own, and it was a rectification of mistake rather than a fraudulent act.

Upon considering the submissions from both sides and examining the records, the Tribunal found that the respondent had inadvertently taken credit in their P.L.A. without a TR-6 Challan. The mistake was promptly rectified by the respondent-company when it was detected, and the duty amount was paid back. A show cause notice was issued, and after adjudication, a token penalty was imposed on the respondents for the error. The adjudicating authority did not levy any interest under Section 11AB of the Central Excise Act, 1944, considering the circumstances.

The Tribunal noted that during the relevant period, the interest under Section 11AB could only be imposed if duty was demanded and confirmed against the assessee under Section 11A, with wilful suppression, misstatement, or fraud. Since the duty amount was voluntarily paid by the respondent without any wilful evasion, suppression, or fraud, the penal interest under Section 11AB was deemed not applicable to the respondent-company.

Based on the above analysis, the Tribunal dismissed the Department's appeal, concluding that the penal interest under Section 11AB of the Central Excise Act, 1944, was not demandable from the respondent-company. The judgment was pronounced in open court by the Tribunal.