2008 (9) TMI 799 - AT - Central Excise

Summary

Issues:
Demand of interest under Section 11AB of the Central Excise Act, 1944 for contravention of Rules 6(B)(1) of the Central Excise Valuation Rules, 1975.

Analysis:
The appeal was filed against the demand of interest of Rs. 4,57,984/- under Section 11AB of the Central Excise Act, 1944. The Appellants, engaged in the manufacture of Ethyl Alcohol, were found to have paid duty on captive consumption at a lower price compared to the same goods manufactured by other units. The differential duty was paid by the Appellants for the period in question. The demand of interest was proposed for contravention of valuation rules, which was confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals).

The Appellant argued that since they paid the differential duty on a specific date, the demand of interest under Section 11AB was not sustainable. They also contended that demand of interest prior to a certain date was not justified, citing relevant case law. On the other hand, the Revenue contended that the Appellant deliberately suppressed the value of goods, leading to evasion of duty, and thus the demand of interest was valid. They relied on a High Court decision upheld by the Supreme Court to support their argument.

Upon review, it was found that the Appellant had paid duty on captive consumption under the new Valuation Rules but had not added the cost of denaturants to the assessable value. The Appellant rectified this error by paying the differential duty promptly. The show cause notice did not allege intentional suppression of facts by the Appellant. The Tribunal found that there was no evasion of duty and that the demand of interest was not sustainable for the period in question. The Tribunal referred to a previous case to support this decision.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, as there was no evasion of duty and the demand of interest was deemed unsustainable for the period under consideration. The decision highlighted the importance of adherence to valuation rules and timely rectification of errors to avoid unnecessary interest liabilities.