2008 (11) TMI 474 - AT - Central Excise

Summary

Issues involved: Non-levy of interest and non-imposition of penalty by the Commissioner (Appeals) on manufacturers of Rectified Spirit, Ordinary Denatured Spirit, and Special Denatured Spirit who took Cenvat credit but later reversed it.

Summary:

Issue 1: Levy of interest and imposition of penalty under Sections 11AB and 11AC

The Appellate Tribunal CESTAT, New Delhi addressed the issue of non-levy of interest and non-imposition of penalty by the Commissioner (Appeals) on manufacturers of different varieties of Ethyl Alcohol who had initially taken Cenvat credit on the quantities but later reversed it. The Tribunal noted that the provision for levy of interest under Section 11AB and imposition of penalty under Section 11AC arises when the extended period of limitation is attracted against the assessee. It was observed that the losses incurred by the manufacturers were never reflected in their statutory records during the relevant period, even though they later reversed the credit. The Tribunal held that the failure to disclose these losses to the Department constituted suppression of facts, warranting the levy of interest and imposition of penalty. Consequently, the Tribunal set aside the Commissioner (Appeals)'s decision and restored the order of the adjudicating authority, which had imposed interest and penalty on the manufacturers.

*(Dictated and pronounced in the open Court on 25-11-2008)*