2009 (6) TMI 697 - AT - Central Excise

Summary

Issues:
Appeal against demand of interest on differential duty and imposition of penalty.

Analysis:
The appeal involved a case where the assessee had cleared excisable products to manufacturers of motor vehicles during a specific period, paying duty based on the agreed price with buyers. The buyers later issued purchase order amendments for an enhanced price, resulting in the assessee issuing supplementary invoices to recover the differential amount and pay the differential duty to the exchequer. The department issued a show-cause notice seeking interest under Section 11AB of the Act and a penalty under Section 11AC. The original authority confirmed the demand of differential duty, interest, and imposed a penalty. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

The challenge in the appeal was against the demand of interest on the differential duty and the imposition of a penalty. The consultant for the assessee argued that interest was not payable under Section 11AB of the Central Excise Act based on High Courts' decisions and a Tribunal's ruling in favor of the assessee. The Tribunal had settled the issue, leading to the demand of interest being set aside. As the assessee promptly paid the differential duty upon receiving the enhanced price from buyers without any delay, there was no suppression of facts to evade payment. The allegation of suppression was deemed baseless, resulting in the penalty being vacated. Consequently, the impugned order was set aside concerning the demand of interest and penalty, and the appeal was allowed.

In conclusion, the judgment favored the assessee by setting aside the demand of interest and penalty, emphasizing the prompt payment of differential duty and the absence of any intent to evade payment.