2011 (11) TMI 277 - HC - Central Excise

Compound Levy Scheme liability to pay duty u/s 3A of the Central Excise Act - Tribunal set aside the order dated 27.04.1998 of determination of annual production capacity (APC) on 24.12.1998 and directed for redetermination of APC production capacity re-determined on 9.2.2000 - Prior to determination of annual production capacity finally, the assessee has deposited the duty in March, 1999 for the period April, 1998 to September, 1998 Revenue claims interest and penalty for late deposit of such duty amount - Held that - In the present case, before determination of the annual production capacity and issuance of show cause notice, the assessee has deposited the duty in March, 1999. In view of above, decided against the Revenue

Summary

Issues:
- Appeal under Section 35G of the Central Excise Act, 1944 against order of the Tribunal regarding Compound Levy Scheme duty payment, interest, and penalty.

Analysis:
The judgment by the High Court of Punjab and Haryana involved an appeal by the revenue under Section 35G of the Central Excise Act, 1944, against an order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi. The case revolved around an assessee who was a manufacturer of hot rolled products under Chapter 72 of the Central Excise Tariff Act, 1985, and had opted for the Compound Levy Scheme, making them liable to pay duty under Section 3A of the Act. The revenue contended that the assessee failed to deposit the duty under the Compound Levy Scheme from the date of determination of annual production capacity, leading to interest and penalty obligations due to the delay in depositing the duty amount. The Tribunal had initially determined the annual production capacity on a provisional basis, which was later challenged by the assessee. Subsequent redetermination of the annual production capacity was made after the assessee had already deposited the duty for a specific period. The revenue sought interest and penalty for the delayed deposit of duty.

The appellant relied on a Division Bench judgment of the High Court, arguing that interest should not be charged from the date the duty was required to be paid. However, the High Court found that the cited judgment was not applicable to the present case. It was noted that in the referenced case, the duty was not paid before the capacity was redetermined, and the assessee had received a show cause notice for payment but had not deposited the duty. In contrast, in the current case, the duty had been deposited by the assessee before the determination of the annual production capacity and issuance of any show cause notice. Therefore, the High Court concluded that there were no grounds for interference with the impugned order and subsequently dismissed the appeal.

In conclusion, the High Court upheld the order of the Tribunal, emphasizing the distinction in the circumstances between the cited case and the present matter regarding duty payment, interest, and penalty under the Compound Levy Scheme.