2007 (9) TMI 672 - AT - Central Excise

Summary

Issues Involved:
1. Demand of duty amounting to Rs. 68,909/- towards cost of facilities, interest, and penalty.
2. Non-imposition of penalty and charging of interest on demand amounting to Rs. 9,20,961/- for minimum demand charges.

Analysis:

Issue 1: Demand of duty amounting to Rs. 68,909/- towards cost of facilities, interest, and penalty:
The case involved M/s. Indian Oxygen Company Limited engaged in the manufacture of Oxygen gas, facing a demand for duty due to extra amounts charged besides the agreed price. The Commissioner adjudicated the show cause notice, dropping part of the demand but confirming a portion towards minimum demand charges and cost of facilities. In the appeal, it was argued that the provision of free infrastructural facilities was not suppressed, as evidenced by the agreement with another company. The Tribunal agreed, setting aside the demand of Rs. 68,909/-, interest under Section 11AB, and penalty under Section 11AC, thereby allowing the assessee's appeal.

Issue 2: Non-imposition of penalty and charging of interest on demand amounting to Rs. 9,20,961/- for minimum demand charges:
The Revenue challenged the non-imposition of penalty and interest on the demand for minimum demand charges. The Tribunal noted that the assessee did not contest this demand for an extended period, indicating admission of suppression. Referring to recent case law, it was held that penalty under Section 11AC and interest under Section 11AB were mandatory. However, as these provisions were introduced from September 1996, they could only be imposed for the period from September 1996 onwards. The matter was remanded to the original authority to determine the exact amount of interest and penalty payable from September 1996 onwards, which the M/s. Indian Oxygen Company Limited would need to pay. The appeal of the Revenue was allowed on this issue.

In conclusion, the Tribunal disposed of both appeals, allowing the assessee's appeal regarding the demand for cost of facilities and setting aside the penalty and interest for the demand related to minimum charges before September 1996, while directing the quantification and payment of interest and penalty for the period from September 1996 onwards.