2009 (3) TMI 89 - HC - Central Excise

Interest on delayed payment of duty - assessee deposited the amount when revenue informed him that his method of paying excise was not correct - first proviso to Section 11AB makes clear that if the assessee deposits the amount of duty within 45 days of being informed about the short deposit no interest shall be payable - In view of this proviso held that no penalty or interest could be levied on the assessee firstly because there is no order passed u/s 11-A and secondly there is nothing on record to show that the assessee did not deposit the amount within 45 days of being informed of his liability

Summary

The High Court of Himachal Pradesh ruled on a case involving the excise valuation of tractor parts. The petitioner, a manufacturer of these parts, was sending them to another unit for tractor assembly. The Excise Department contended that the parts sold by the Faridabad unit should be valued at the dealer sale rate, not the assembly rate. The petitioner paid the difference in tax upon notification. The Commissioner Excise imposed interest and penalty, which the petitioner challenged before the CEGAT. The CEGAT ruled in favor of the petitioner, stating that penalty and interest could not be levied without a Section 11-A order,. The court analyzed Section 11-AA, 11-AC, and 11-AB, concluding that no penalty or interest could be imposed as the petitioner paid the amount within 45 days of being informed. Therefore, the Excise Reference was resolved in favor of the petitioner. The judgment highlights the importance of following statutory procedures before imposing penalties or interest on taxpayers.