2009 (4) TMI 813 - AT - Central Excise

Summary

Issues involved:
The appeal challenges the imposition of interest and penalty on the appellant for non-payment of Cenvat credit on goods during the years 2000-01 and 2001-02 under Notification No. 6/2000 dated 1-3-2000.

Summary:

Interest Liability Issue:
The appellants, manufacturers of Kraft paper, opted for exemption from excise duty under Notification No. 6/2000. They did not reverse/paid the Cenvat credit on goods when opting for exemption. The department pointed this out, and the appellants paid the due amount but did not pay the interest for the delayed payment. The original order confirmed the interest demand and imposed a penalty. The appeal contests the interest and penalty imposed. The Commissioner (Appeals) upheld the order-in-original. The Tribunal held that the appellants were liable for interest as they availed Cenvat credit on inputs that should have been reversed when clearing finished products without duty payment. The Tribunal upheld the interest liability.

Penalty Issue:
The show cause notice invoked Rule 25 of the Central Excise Rules, 2002 for imposing a penalty on the appellant for non-payment of interest. However, the order-in-original imposed a penalty under Section 11C of the Central Excise Act, 1944. The Tribunal found that the penalty imposed under Section 11AC was unsustainable as the notice did not invoke these provisions. The penalty under Section 11AC was set aside.

In conclusion, the Tribunal upheld the interest liability on the appellant but set aside the penalty imposed under Section 11AC.