2010 (7) TMI 380 - AT - Central Excise

Interest and penalty Duty liability - competent authority provisionally decided the duty liability of the respondents - differential duty in terms of the provisional order was already deposited with the competent authority by the respondents Held that - In the absence of such determination of duty liability there was no occasion for the Department to demand any interest or penalty from the respondents Appeal is dismissed

Summary

Issues:
1. Dispute over payment of duty under compounded levy scheme.
2. Validity of interest and penalty imposed on the respondents.
3. Interpretation of orders and liability for duty payment.

Analysis:
1. The appeal arose from an order passed by the Commissioner (Appeals) Ludhiana, modifying the Joint Commissioner's order for recovery of a sum along with interest and penalty against the respondents for failure to pay duty under the compounded levy scheme within the prescribed time. The Commissioner (Appeals) held that the duty liability was discharged within time, thus rejecting the demand for interest and penalty.

2. The respondents were engaged in manufacturing hot rolled products under the compounded levy scheme. Initially, the duty liability was fixed by the Commissioner, and after a remand by the Tribunal, the duty liability was provisionally determined and later finalized. The differential duty was deposited by the respondents, and proceedings were initiated for recovery of interest and penalty due to alleged delay in payment. The adjudicating authority accepted the Department's contention, but the Commissioner (Appeals) set aside this decision, stating that there was no valid subsisting order fixing duty liability against the respondents during the relevant period.

3. The Commissioner (Appeals) noted that after the Tribunal's order setting aside the initial duty liability determination, there was no valid order fixing duty liability against the respondents until a provisional determination was made in 1999. The differential duty was already deposited by the respondents, and any arrears of duty liability after this date were due to the lack of a determination rather than any fault on the part of the respondents. Therefore, the absence of a duty liability determination until 1999 precluded the Department from demanding interest or penalty, as rightly held by the Commissioner (Appeals).

In conclusion, the Tribunal found no grounds for interference in the impugned order, dismissing the appeal due to the absence of a valid duty liability determination during the relevant period, which precluded the imposition of interest and penalty on the respondents.