2006 (5) TMI 426 - Commission - Central Excise

Summary

Issues: Settlement application regarding wrong availment of Cenvat credit and non-amortization of cost of moulds and dyes.

In this case, the applicant, a manufacturing company, filed a settlement application with reference to a Show Cause Notice issued by the Central Excise authorities. The notice alleged that the applicant had imported finished goods, availed Cenvat credit on them, and cleared them as if manufactured in their factory. Additionally, the applicant received moulds and dyes free of cost from other companies for manufacturing finished goods, but the cost of these items was not included in the transaction value for Central Excise duty payment. The total duty amount in question was Rs. 2,33,404, comprising Rs. 72,863 for wrong Cenvat credit and Rs. 1,60,541 for non-amortization of moulds and dyes cost.

During the hearing, the applicant admitted the charges and paid the entire duty amount before the issuance of the Show Cause Notice. The applicant sought relief from payment of interest and penalty, citing precedents and decisions from various courts. The Advocate requested the hearing to be treated as admission-cum-final hearing, which the Revenue representative did not object to. The Bench observed the long duration between the duty liability year and the actual payment, ordering the applicant to pay simple interest at 10% per annum. However, the applicant was granted immunity from interest exceeding 10% per annum due to their cooperation.

The Bench found that the application met the entry conditions under Section 32E of the Central Excise Act, allowing it to proceed under Section 32F. The settlement was granted under Section 32K(1) of the Act, settling the duty liability at Rs. 2,33,404, with no further payment required as the amount was already paid. The applicant was directed to pay simple interest at 10% per annum from the due date till payment, with the Revenue calculating and communicating the interest payable within 15 days. Immunity from penalty under the Act was also granted as requested, subject to the settlement being void if obtained through fraud or misrepresentation of facts.