2011 (4) TMI 1064 - AT - Central Excise

Payment of interest under Section 11AB of the Central Excise Act, 1944 on the delayed payment of duty Held that - appellant had applied for single registration, which was denied to them initially and subsequently after the order of this Tribunal, which was upheld by the Hon ble High Court, they were granted single registration in 2007. If the single registration were granted initially itself, the appellant would have been eligible for the benefit of Notification No. 67/95-C.E. and there will not be any requirement of payment of differential duty, appellant had already deposited the amount of duty confirmed, appellant had made out a prima facie case for waiver of interest on the duty demanded, stay of recovery of interest, on the duty demanded and paid, during the pendency of this appeal

Summary

Issues:
- Confirmation of payment of interest under Section 11AB of the Central Excise Act, 1944
- Setting aside of penalty imposed by the adjudicating authority

Analysis:

Confirmation of Payment of Interest under Section 11AB:
The appeal challenged the order confirming the payment of interest under Section 11AB of the Central Excise Act, 1944 on the delayed payment of duty. The appellant, Vidyut Metallics Pvt. Ltd. (VMPL), had two plants with separate excise registrations. They cleared goods manufactured in one plant for captive consumption to another plant and job workers. The department demanded differential duty for a specific period, which was confirmed by the Assistant Commissioner. The appellant contested the payment of interest and penalty but not the duty demand. The lower appellate authority upheld the interest payment but set aside the penalty. The appellant argued that if single registration had been granted earlier as requested, no duty payment would have been required, hence no interest. The department contended that once duty was accepted and paid, interest was automatic. The Tribunal considered the unique circumstances and granted a stay on the recovery of interest, recognizing a prima facie case for waiver due to the delayed single registration issue.

Setting Aside of Penalty:
The penalty imposed by the adjudicating authority under Section 11AC read with Rule 25 of the Central Excise Rules, 2002 was set aside by the lower appellate authority. The appellant did not contest the duty demand but challenged the penalty. The Tribunal did not delve into the penalty issue further as the main focus was on the interest payment under Section 11AB. The decision to stay the recovery of interest implicitly addressed the penalty aspect as well, as the interest waiver was granted based on the circumstances surrounding the duty demand and delayed single registration grant.

In conclusion, the Tribunal partially allowed the appeal by staying the recovery of interest on the duty demanded, acknowledging the unique situation where delayed single registration led to the duty payment. The penalty issue was not extensively discussed as the primary concern was the interest payment under Section 11AB. The judgment highlighted the importance of considering specific circumstances in excise duty cases to determine the applicability of interest and penalties.