2006 (6) TMI 354 - AT - Central Excise

Summary

Issues:
1. Calculation of interest on belated duty payment under Rule 8(3) of the Central Excise Rules, 2002.
2. Imposition of penalty under Rule 25 of the Central Excise Rules, 2002 when duty was paid before the show-cause notice.

Analysis:

1. Interest Calculation under Rule 8(3):
The appeal contested a demand for interest on a duty amount paid belatedly, initially calculated at Rs. 1,000 per day under Rule 8(3) of the Central Excise Rules, 2002. The appellant argued that following a High Court judgment, interest should be calculated at two percent per month (twenty-four percent per annum) as per Section 11AB of the Central Excise Act. The Tribunal concurred, setting aside the daily rate and directing a fresh interest calculation in line with the High Court's interpretation. This decision aligned with the legal position post the High Court ruling, emphasizing adherence to the prescribed interest rate under Section 11AB.

2. Penalty Imposition under Rule 25:
Regarding the penalty imposed under Rule 25 of the Central Excise Rules, 2002, equivalent to the earlier Rule 173Q, the Tribunal considered the payment of the entire duty before the show-cause notice. Citing established legal precedent, the Tribunal ruled that when duty is paid prior to the issuance of a show-cause notice, no penalty is applicable under Rule 25. This ruling was consistent with past interpretations and clarified that the absence of a show-cause notice preceding duty payment precludes the imposition of penalties under the relevant rules. Consequently, the penalty imposed on the appellant was set aside based on this legal principle.

In conclusion, the Tribunal modified the impugned order, directing a revised calculation of interest in line with the High Court's interpretation of Rule 8(3) and setting aside the penalty under Rule 25 due to the pre-payment of duty before the show-cause notice. The appeal was disposed of accordingly, reaffirming the significance of legal precedents and statutory provisions in determining interest and penalty liabilities in excise duty matters.