2005 (10) TMI 462 - AT - Central Excise

Summary

Issues:
1. Interpretation of notification regarding payment of duty, interest, and penalty.
2. Liability of manufacturer for interest and penalty for failure to pay the whole amount of duty.
3. Correctness of the lower appellate authority's decision regarding interest and penalty.

Issue 1: Interpretation of notification regarding payment of duty, interest, and penalty

The case involved a manufacturer of rectangular bars who opted for lump sum duty payment under specific rules. The annual production capacity was determined by the Commissioner based on formulae from notifications, and duty was calculated accordingly. The manufacturer requested a change in capacity, reducing the duty amount before receiving a response from the Commissioner. The issue arose when the manufacturer failed to pay the total duty by the specified date, leading to a show cause notice proposing interest and penalty. The lower appellate authority interpreted the notification to require non-payment of the entire duty for interest and penalty to apply, which was disputed in the appeal.

Issue 2: Liability of manufacturer for interest and penalty for failure to pay the whole amount of duty

The Tribunal disagreed with the lower appellate authority's interpretation, stating that the notification imposes liability if the manufacturer fails to pay the entire duty by the specified date. The notification mandates payment of outstanding duty with interest and allows for a penalty equal to the outstanding amount. Since the manufacturer did not pay the full duty by the due date, they were held liable for interest and penalty. As the manufacturer only deposited the differential duty amount in a later month, they were also liable for a penalty equal to the outstanding duty amount as of the original due date.

Issue 3: Correctness of the lower appellate authority's decision regarding interest and penalty

The Tribunal held that the direction to pay interest and impose a penalty by the adjudicating authority was legally correct. They set aside the decision of the Commissioner (Appeals) and allowed the appeal, affirming the liability of the manufacturer for interest and penalty due to non-payment of the full duty amount by the specified date. The decision emphasized the strict compliance required by the notification and upheld the imposition of interest and penalty as per the applicable provisions.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Mumbai highlights the issues surrounding the interpretation of the notification, the liability of the manufacturer for interest and penalty, and the correctness of the decisions made by the lower appellate authority.