2007 (8) TMI 559 - AT - Central Excise

Summary

Issues: Calculation of interest amount based on reducing balances after considering Cenvat credit vs. Revenue's contention of interest on outstanding duty amount; Penalty imposition.

Analysis:

1. Calculation of Interest Amount: The appeal revolved around the calculation of interest amount by the appellant based on reducing balances after considering Cenvat credit, while the Revenue argued that interest should be levied on the outstanding duty amount. The Tribunal referred to Rule 173-G of the Central Excise Rules, 1944, which mandates that if the appellant fails to pay the duty by the due date, they are liable to pay the outstanding amount along with interest at the rate of twenty-four per cent per annum on the outstanding amount until the actual payment. The Tribunal concluded that the provisions are clear, stating that any outstanding duty amount must be paid along with interest, without the need to interpret that interest should be calculated on the reducing balance of Cenvat credit against the outstanding excise duty. Consequently, the Tribunal did not find merit in the appeal regarding the interest calculation.

2. Penalty Imposition: The Deputy Commissioner had issued an order withdrawing the fortnightly payment facilities due to the appellant's default in paying excise duty, leading to short payments during a specific period. The appellant rectified these short payments later. However, the Revenue initiated proceedings resulting in impugned orders confirming extra interest and imposing a penalty of Rs. 2 lakhs. The Tribunal, considering the circumstances, reduced the penalty to Rs. 50,000 while maintaining the rest of the decision. The Tribunal's decision to reduce the penalty was based on the facts presented, acknowledging the appellant's rectification of the duty short payments and payment of interest, thus adjusting the penalty amount.

In conclusion, while the Tribunal rejected the appeal concerning the interest calculation based on reducing balances after considering Cenvat credit, it modified the penalty imposed, reducing it from Rs. 2 lakhs to Rs. 50,000, considering the overall circumstances of the case.