2005 (11) TMI 339 - AT - Central Excise

Summary

Issues:
Liability to pay applicable rate of duty on sugar supplied to Government of India on loan basis as levy sugar; Imposition of mandatory penalty under Section 11AC and demand of interest under Section 11AB.

Analysis:

Issue 1 - Liability to pay applicable rate of duty on sugar supplied to Government of India on loan basis as levy sugar:
The case involved the supply of sugar to the Government of India on loan basis as levy sugar. The appellants contended that they paid the differential duty before the issue of the show-cause notice by the department. They delivered the sugar as levy sugar and charged excise duty as applicable. The Commissioner noted that there was no dispute about the duty involved, and the appellants had paid the differential duty as well. The Government of India paid the appellants the differential price, and the duty was paid promptly. The Commissioner found that there was no evidence of deliberate suppression of information to evade payment of duty. The appellants did not dispute the demand of differential duty and had paid it before the adjudication proceedings. The Commissioner concluded that the imposition of penalties and charging of interest was not warranted in this case.

Issue 2 - Imposition of mandatory penalty under Section 11AC and demand of interest under Section 11AB:
The Revenue contended that the Commissioner erred in not imposing mandatory penalty as the duty paid goods had been removed with a lesser rate of duty. However, it was argued that a circular issued by the Government clarified the situation, stating that there was no revision of duty required as the sugar taken on loan basis had been returned to the factories. The Tribunal referred to a similar ruling in another case where it was held that mandatory penalty was not leviable when there was no loss of revenue. The Tribunal rejected the Revenue's appeal, stating that there was no merit in imposing the penalty.

In conclusion, the judgment addressed the issues of duty payment on sugar supplied on loan basis as levy sugar and the imposition of mandatory penalty and interest. It found in favor of the appellants, stating that there was no evidence of deliberate suppression of information to evade duty payment and that the mandatory penalty was not applicable due to the circumstances of the case and the absence of revenue loss.