2008 (12) TMI 570 - AT - Central Excise

Summary

Issues:
1. Examination of interest for the delayed period as per High Court order
2. Question of penalty leviable when duty paid before show cause notice issuance
3. Applicability of Section 11A of Central Excise Act, 1994
4. Interpretation of Supreme Court decision on duty evasion and deposit liability
5. Legality of the Tribunal's Final Order No. 939/2006
6. Imposition of penalty under Rule 173Q of Central Excise Rules, 1944

Analysis:

1. The matter was brought before the Appellate Tribunal CESTAT, Bangalore following a remand order from the High Court to examine the interest for the delayed period. The Tribunal's Final Order No. 939/2006 had previously held that no penalty is leviable when duty was paid before the issuance of a show cause notice. The High Court partially accepted an appeal related to the same facts and directed the Tribunal to reconsider the interest issue only. The Tribunal was instructed to complete the proceedings within six months from the date of the order.

2. The High Court's decision upheld the Tribunal's ruling regarding penalty, stating that no penalty is applicable when duty is paid before the show cause notice is issued. The Tribunal's Final Order was affirmed in this regard.

3. The issue of interest was not raised before the Tribunal or in the grounds of appeal presented by the revenue to the High Court. The grounds of appeal primarily focused on penalty provisions under Section 11A of the Central Excise Act, 1994, and cited a Supreme Court decision regarding duty evasion and deposit liability. As interest was not a subject of contention, the High Court dismissed the revenue's appeal, emphasizing that no further action regarding interest was deemed necessary.

4. The revenue's grounds of appeal highlighted alleged errors in the Tribunal's Final Order, arguing that immunity from penalty should not have been granted when duty was paid after the Department detected evasion. They also claimed that the Tribunal failed to consider the provisions of Section 11A and misinterpreted a Supreme Court decision on duty evasion and deposit liability. The revenue sought the imposition of a penalty under Rule 173Q of the Central Excise Rules, 1944.

5. In conclusion, the High Court's decision clarified the stance on penalty in the case, affirming the Tribunal's ruling. However, as the issue of interest was not raised during the appeal process, the Court dismissed the revenue's appeal, thereby upholding the Tribunal's decision regarding the penalty and not requiring further action on the interest matter.