2006 (12) TMI 306 - AT - Central Excise

Summary

Issues involved: Confirmation of short levy, imposition of penalty, confiscation of property, determination of assessable value, inclusion of interest in assessable value, levy of interest under Section 11AB, penalty reduction, confiscation set aside.

The judgment by the Appellate Tribunal CESTAT, Mumbai involved the confirmation of short levy amounting to Rs. 21,20,913 along with penalty imposition of Rs. 5,00,000 under Rule 173Q(1) of the Central Excise Rules, 1944, and confiscation of property. The demand was based on the re-determination of assessable value from August 1991 to February 1994, considering cost of production and interest free advances. The Commissioner upheld the assessable value based on cost of production but included 18% interest on advances, which was challenged by the appellant. The Tribunal reduced the duty demand to Rs. 19,09,713 by excluding the interest amount. The levy of interest under Section 11AB was set aside due to procedural reasons as it was proposed before the introduction of Section 11AB in the Central Excise Act, 1944. The penalty imposed was reduced to Rs. 2,00,000 considering the circumstances, and the confiscation of property was set aside due to the appellant not being a repeated offender.

In the appeal, it was noted that the Commissioner had confirmed the short levy and imposed a penalty under Rule 173Q(1) of the Central Excise Rules, 1944, along with ordering the confiscation of property. The assessable value was determined based on cost of production and interest free advances, with the inclusion of 18% interest. The Tribunal, however, reduced the duty demand by excluding the interest amount from the assessable value. The levy of interest under Section 11AB was set aside due to procedural issues as the show cause notice did not propose it before the introduction of Section 11AB in the Central Excise Act, 1944. The penalty imposed was reduced to Rs. 2,00,000, and the confiscation of property was set aside considering the appellant's status as a non-repeated offender.