2007 (10) TMI 116 - AT - Central Excise

On detection that benefit of Not. 108/95 is not available duty was deposited before SCN Held that Interest is payable for Jan.2004 to March 2004 in view of amendment in provision of Sec. 11AB on May 2001 if amount is due to govt. But penalty u/s 11AC is not imposable

Summary

Issues:
- Imposition of penalty under Section 11AC
- Imposition of interest under Section 11AB

Imposition of Penalty under Section 11AC:
The appeal was filed by the Revenue against an Order-in-Appeal where the Commissioner had set aside the penalty and interest due to the duty being paid before the show cause notice. The case revolved around clearances of finished goods to a project under a specific notification. The appellant had produced a certificate from the project authority, but it did not meet the requirements of the notification. The Tribunal referenced a decision by the High Court which stated that penalty under Section 11AC is applicable even if the amount is paid before the notice. However, in this case, the Tribunal found that the appellant had misunderstood the notification requirements and had produced some certificate, making Section 11AC inapplicable. Consequently, the Tribunal ruled that there were no merits in the Revenue's case for the non-imposition of penalty.

Imposition of Interest under Section 11AB:
Regarding the imposition of interest under Section 11AB, the Tribunal found that the Commissioner had erred in setting aside the interest imposed on the appellant. The period in question was from January 2004 to March 2004, and the provisions of Section 11AB had been amended in May 2001. The amendment made it clear that interest is payable by the assessee when the amount is due to the government. As such, the Tribunal held that setting aside the interest liability was inconsistent with the provisions of Section 11AB. Therefore, the appeal against the non-imposition of interest was upheld, and the order of the adjudicating authority regarding the imposition of interest was restored. The Tribunal rejected the appeal filed by the Revenue for penalty under Section 11AC but upheld the appeal against the non-imposition of interest.