2009 (3) TMI 724 - AT - Central Excise

Summary

Issues involved: Appeal against imposition of penalty under Rule 173Q(1)(a) and interest demand under Section 11AB.

Imposition of Penalty under Rule 173Q(1)(a): The appeal was filed by the Revenue challenging the order setting aside the penalty imposed by the Joint Commissioner. The Revenue argued that penalty was rightly imposed as the Respondent cleared goods to their sister concern at a price different from the required duty basis. The Departmental Representative contended that mens rea is not necessary for imposing penalty under Rule 173Q(1)(a), citing precedent. On the other hand, the Respondent's representative argued that there was no intention to evade duty payment and penalty should not apply if Cenvat credit was available to the sister concern. The Tribunal held that penalty under Rule 173Q(1)(a) is imposable for contravention of Central Excise Rules, irrespective of mens rea, based on previous Tribunal decisions and a Supreme Court judgment. Consequently, the penalty was reinstated by setting aside the earlier order.

Interest on Short Payment under Section 11AB: The dispute revolved around the charging of interest on short payment of duty during a specific period. The Respondent contended that wilful misstatement, fraud, or suppression of fact was required to charge interest under Section 11AB, and there was no evidence of such actions in this case. The Tribunal agreed that there was no evidence to support charging interest under Section 11AB, thereby upholding the decision to not impose interest. Consequently, the impugned order regarding interest under Section 11AB was upheld.

Conclusion: The Tribunal upheld the decision regarding interest under Section 11AB but set aside the order concerning penalty under Rule 173Q(1)(a), restoring the penalty imposed by the Joint Commissioner. The impugned order was modified accordingly.