2009 (8) TMI 1134 - AT - Central Excise

Summary

Issues involved: Interest liability on subsequent duty payment based on escalation clause, invocation of Section 11AC for penalty.

In the judgment by Appellate Tribunal CESTAT AHMEDABAD, the issue of interest liability amounting to Rs. 5,06,818/- against the appellant was confirmed along with a penalty of equal amount due to subsequent duty payment based on an escalation clause in the contract. The appellant's advocate referred to earlier Tribunal decisions stating no interest liability for such payments, but acknowledged the reversal of these decisions by a recent Supreme Court judgment in the case of CC Pune v. SKF (India) Ltd. The advocate argued against invoking Section 11AC for penalty, citing the appellant's reliance on favorable Tribunal decisions in good faith. The Joint CDR agreed on confirming the interest but left the penalty decision to the Tribunal's discretion. The Tribunal, considering the Supreme Court judgment in the SKF (India) Ltd. case, upheld the interest liability but set aside the penalty, noting the appellant's genuine belief based on previous Tribunal decisions. The stay petition and appeal were disposed of accordingly.