2011 (1) TMI 247 - AT - Central Excise

Demand of interest and penalty - appellants have collected additional amounts almost concurrently by issuing debit notes without raising second invoices - extra amounts received have not been shown to the Department and no duty has been paid on receipt of the extra amounts case of suppression with intention to evade payment of duty - imposition of penalty under Section 11AC of the Act - appellants have not challenged the demand issued invoking extended period but instead the duty amounts have been paid subsequent to the departmental authorities pointing out the fact of non-payment of duty on the additional amounts collected - demand of interest as upheld by the lower appellate authority confirmed - penalty imposed by the original authority restored Dept. appeal allowed

Summary

Issues:
1. Demand of interest on duty payment delay
2. Imposition of penalty under Section 11AC of the Act

Issue 1: Demand of interest on duty payment delay
The case involved the collection of additional conversion charges by the assessee from a party, which necessitated the payment of duty as per the Central Excise Valuation Rules. The assessee paid the duty amount after it was pointed out by the Audit Party, but later disputed the requirement to pay interest for delayed payment. The Assistant Commissioner issued a Show Cause Notice demanding the duty, education cess, interest, and penalty. The Joint Commissioner confirmed the duty demand, interest, and imposed a penalty under Section 11AC of the Act. The Commissioner (Appeals) modified the order, upholding the duty demand, appropriation of amount, and interest, but setting aside the penalty. The Committee of Commissioners found the Order-in-Appeal not acceptable, leading to an appeal by the appellant-assessee against the demand of interest.

Issue 2: Imposition of penalty under Section 11AC of the Act
The appellant-assessee contended that they were not aware of the duty requirement for the additional amounts collected, promptly paying the duty upon notification. They argued against the demand of interest, stating they had a bona fide belief that duty was not payable. On the other hand, the Department argued that the appellants suppressed information by collecting extra amounts but not paying the central excise duty until pointed out during an audit. The Department maintained that penalty was imposable under Section 11AC due to the suppression and evasion of duty. The Tribunal found the case to be distinct from precedents cited, noting the concurrent collection of additional amounts through debit notes without raising second invoices. The Tribunal held that the failure to pay duty on the extra amounts collected constituted suppression with an intent to evade payment, justifying the imposition of penalty under Section 11AC. The Tribunal confirmed the demand of interest but set aside the waiver of penalty, restoring the penalty imposed by the original authority.

In conclusion, the Appellate Tribunal dismissed the appeal filed by the assessee-appellant and allowed the appeal filed by the Department, confirming the demand of interest and restoring the penalty under Section 11AC of the Act.