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2011 (11) TMI 569 - AT - Central ExciseDemand of differential duty - Rule 8 of the Central Excise (Valuation) Rules 2000 - Held that - Respondent-assessee had discharged their duty liability on the machine parts cleared to their sister concern based upon their understanding of the Central Excise Valuation Rules they discharged the differential duty before the issuance of show cause notice and also filed returns with revenue authorities. In our considered view there was no fraud collusion or mis-statement for suppression of the fact as the goods which were cleared from the factories to their sister concerns the recipient unit is eligible to avail Cenvat credit of the duty paid on such machinery parts - provisions of Section 11AB were very clear that any duty liability discharged by an assessee interest liability automatically arises - respondents are directed to pay the interest on the amount of differential duty discharged by them and the appeal filed by Revenue to that extent is allowed while the appeal against the impugned order in respect of setting aside of the penalty and setting aside of the confiscation is rejected - Decided partly in favour of Revenue.
Issues:
- Correct valuation of goods for duty payment - Imposition of penalties under Section 11AC - Demand for interest under Section 11AB - Confiscation of goods cleared during the relevant period Analysis: Correct Valuation of Goods for Duty Payment: The case involved a dispute regarding the correct valuation of goods for duty payment by the respondent, who was manufacturing textile machinery parts and clearing them to their sister concern. The lower authorities issued a show cause notice directing the respondent to pay differential duty based on Rule 8 of the Central Excise Valuation Rules, 2000. The respondent contested the notice but paid the differential duty before its issuance. The Commissioner (Appeals) upheld the demand for duty but set aside penalties, interest, and confiscation. The appellate tribunal found that the respondent had valued the goods based on their understanding of the law at the time and had paid duty before the notice, concluding that there was no intention to evade payment. The tribunal agreed with the Commissioner (Appeals) on setting aside penalties and confiscation. Imposition of Penalties under Section 11AC: The tribunal referred to the Supreme Court judgment in UOI v. Rajasthan Spinning Mills, emphasizing the need to consider the ingredients of Section 11AC for penalty imposition. It was established that there was no intention to evade duty payment through fraud, collusion, suppression, or misstatement. The respondent had discharged their duty liability, filed returns, and acted in accordance with their understanding of the Central Excise Valuation Rules. As a result, the tribunal upheld the decision to set aside the penalties imposed on the respondent. Demand for Interest under Section 11AB: Regarding the interest liability, the tribunal cited the Supreme Court judgment in CCE, Pune v. SKF India Ltd., stating that interest arises when duty liability is discharged. The provisions of Section 11AB during the relevant period were clear on the automatic interest liability for duty payments. Therefore, the tribunal found the decision of the Commissioner (Appeals) to set aside the interest liability incorrect and ordered the respondent to pay interest on the amount of the discharged differential duty. Confiscation of Goods Cleared during the Relevant Period: The tribunal clarified that since there was no seizure of the goods, the question of confiscation did not arise, citing the precedent set by the Larger Bench in Shiv Kripa Ispat Pvt. Ltd. v. CCE, Nasik. The tribunal agreed with the Commissioner (Appeals) on setting aside the confiscation due to the proper clearance of goods by the respondent to their sister concern. In conclusion, the tribunal directed the respondent to pay interest on the discharged differential duty, allowed the appeal by the Revenue on this aspect, and rejected the appeal against setting aside penalties and confiscation.
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