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2017 (2) TMI 1161 - AT - Central ExciseImposition of penalty u/s 11AC of CEA, 1944 - the issue of payment of duty was in doubt - Held that - The Hon ble Supreme Court in the case of Devans Modern Breweries Ltd. Vs. Commissioner of Central Excise, Chandigarh 2006 (8) TMI 15 - SUPREME COURT OF INDIA holds that penalty u/s 11AC of CEA, 1944 is imposable if non-payment of duty involves fraud, collusion, willful misstatement or suppression of facts with intent to evade - there are no malafides involved and the issue of liability of duty on the subject goods during the relevant period was not free form doubt - penalty set aside. Interest - Held that - when the duty has not been paid on time, the interest is payable for the period till the duty is paid. Consequently there cannot be any relief admissible to both the appellants for non-payment of interest. Appeal disposed off - decided partly in favor of appellant.
Issues:
Appeal against Order-In-Appeal sustaining duty, interest, and penalty liability. Argument of no certainty on duty liability to avoid penalty and interest. Applicability of penalty under section 11AC of Central Excise Act. Liability to pay interest under Section 11AB of Central Excise Act. Setting aside penalty based on lack of malafides and doubt on duty liability. Analysis: The appeal before the Appellate Tribunal CESTAT New Delhi involved M/s Vishal Metal Industries and M/s Krishna Metal Industries contesting the Order-In-Appeal no. 230-231 dated 31.12.2008 passed by Commissioner (Appeals), Delhi-I, which upheld duty, interest, and penalty liability against the appellants. The Chartered Accountant representing the Appellants argued that due to uncertainty on duty liability and lack of intention to evade Central Excise duty, the appellants should not be liable for penalty and interest. The Tribunal noted that when there are no malafides on the part of the appellants, penalty is not imposable as per the decision of the Hon'ble Supreme Court in Devans Modern Breweries Ltd. vs. Commissioner of Central Excise, Chandigarh. The Court held that penalty under section 11AC of the Central Excise Act is applicable only in cases involving fraud, collusion, willful misstatement, or suppression of facts with 'intent to evade'. Therefore, the penalty imposed on the appellants was set aside based on the lack of malafides and doubt regarding duty liability during the relevant period. Regarding the liability to pay interest, the appellants' argument that they should not be liable for interest due to the absence of malafides was rejected. The Tribunal clarified that as per Section 11AB of the Central Excise Act, interest is payable on delayed payment of duty, regardless of the presence of malafides. The basic premise is that interest is payable until the duty is paid, and relief from interest payment cannot be granted when duty payment is delayed. In conclusion, the Tribunal partially allowed the appeals by setting aside the penalty imposed on the appellants based on the lack of malafides and doubt on duty liability during the relevant period. The decision was in line with the Hon'ble Gujarat High Court's ruling in the case of Commissioner of Central Excise & Customs, Service Tax vs. V.V.F. Ltd. 2011. The impugned Order-In-Appeal was modified accordingly, providing relief to the appellants in terms of penalty liability.
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