2008 (2) TMI 675 - AT - Central Excise

Summary

Issues involved: Imposition of penalty and demand of interest under Section 11AB of the Central Excise Act, 1944.

Imposition of Penalty:
The appellants were engaged in the manufacture of V.P. Sugar and were directed to sell a specified quantity as levy sugar out of the stock of free sale sugar. They cleared free sale sugar as levy sugar during a certain period, resulting in a duty shortfall. A show cause notice was issued proposing a demand of the differential duty, interest, and penal action. The Addl. Commissioner confirmed the demand and imposed a penalty under Rule 173Q read with Section 11AC. On appeal, the Commissioner (Appeals) upheld the penalty. However, it was argued that there was no intention to evade payment of duty as the appellants acted as per government instructions. The Tribunal found no suppression of facts and set aside the penalty of Rs. 4,83,648.

Demand of Interest under Section 11AB:
While the penalty was set aside, the appellants were held liable to pay interest under Section 11AB on the duty demanded and confirmed. The interest was to be calculated from the date the differential price was received to the date of payment of the differential duty. This decision was based on the Tribunal's ruling in a previous case. The appeal was disposed of with the order for the appellants to pay the applicable interest as per Section 11AB of the Central Excise Act, 1944.