2007 (8) TMI 109 - AT - Central Excise

Interest - Alleged that appellant liable for penalty and interest on the ground that appellant has made short payment of duty based on CAS-4 and later paid after being pointed out by the audit team- allegation is correct and interest and penalty sustained

Summary

Issues:
Appeal against Commissioner (Appeals) order dated 28-3-2007 regarding demand of interest under Section 11AB and penalty under Rule 25 of the Central Excise Rules.

Analysis:

Issue 1: Demand of Interest
The appellant contested the demand of interest, arguing that determining the exact cost of production for assessable value at the time of clearance was impossible. They paid the differential duty upon receiving the CAS-4 certificate and being pointed out by audit parties. The appellant claimed that interest under Section 11AB was not attracted as the duty was paid after receipt of the CAS-4 certificate, and the show cause notice for interest issued in March 2006 was time-barred. The appellant relied on legal precedents to support their arguments.

Issue 2: Applicability of Interest
The Commissioner (Appeals) upheld the demand of interest, stating that interest becomes payable in cases of short-levy/short-payment of duty or erroneous refund, regardless of whether the duty was determined by a Central Excise Officer or paid voluntarily by the assessee. The Commissioner provided a detailed interpretation of Section 11AB and Explanation 2, emphasizing the mandatory nature of interest payment. Legal precedents were cited to support the Commissioner's decision.

Issue 3: Provisional Assessment
The Tribunal noted that the duty was payable at the time of goods removal, and the appellant could have opted for provisional assessment under Rule 7(1) of the Central Excise Rules if the value was not firmly ascertainable at the time of clearance. Since the appellant did not choose provisional assessment and the duty was determined by officers after finding an omission, the interest liability was deemed automatic. The Tribunal disagreed with the appellant's argument that paying duty on 20-10-2004 entitled them to a waiver of interest.

Conclusion:
The Tribunal dismissed the appeal, affirming the Commissioner (Appeals) decision regarding the demand of interest under Section 11AB. The Tribunal held that the duty was payable at the time of goods removal, and the appellant's failure to opt for provisional assessment led to the automatic interest liability. The Tribunal emphasized the mandatory nature of interest payment on duty discrepancies and rejected the appellant's arguments against interest payment.