2017 (3) TMI 636 - AT - Central Excise

Liability of interest - differential duty paid on being pointed out - Held that - the issue whether interest is payable on differential duty is pending before the Hon ble Larger Bench of the Supreme Court as referred by the Hon ble Apex Court in the case of M/s Steel Authority of India Ltd., (SAIL) Vs CCE, Raipur reported in 2015 (12) TMI 594 - SUPREME COURT - the issue whether assessee is liable to pay interest upon the differential duty requires to be remanded to the adjudicating authority - appeal allowed by way of remand. Penalty - Held that - the issue whether interest is payable on differential duty is still a contentious one. Further, the appellants have paid differential duty immediately on being pointed out by the department - penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Valuation of goods based on estimation basis vs. cost construction method under Central Excise Valuation Rules, 2000.
2. Payment of interest on the differential duty.
3. Imposition of penalty for non-payment of interest.

Analysis:
1. The appeal involved a dispute regarding the valuation of goods by the assessee for clearances made to related units. The assessee initially used an estimation basis for valuation instead of the cost construction method as per the Central Excise Valuation Rules, 2000. Upon detection of this irregularity by the DGCEI, the assessee rectified the valuation method and paid the differential duty of ?35,50,597 but did not pay the interest on the differential duty. The original authority confirmed the duty, appropriated the amount paid, and also confirmed the interest. The Commissioner (Appeals) upheld the demand for interest, leading to the assessee filing an appeal against the confirmation of interest and the department appealing against the non-imposition of penalty.

2. The tribunal considered the issue of whether interest is payable on the differential duty, noting that the matter was pending before the Hon'ble Larger Bench of the Supreme Court. Referring to a similar case, the tribunal held that the question of liability to pay interest required remand to the adjudicating authority. Given that the appellants had paid the differential duty promptly upon detection by the department, and considering the contentious nature of the interest payment issue, the tribunal upheld the decision not to impose a penalty. Consequently, the department's appeal against the non-imposition of penalty was dismissed, while the assessee's appeal was allowed by way of remand for further consideration.

3. The tribunal's decision was based on the legal complexities surrounding the payment of interest on the differential duty and the prompt payment made by the assessee upon detection of the irregularity. The tribunal emphasized the need for a thorough examination of the issue of interest payment and upheld the authorities' decision not to impose a penalty in this case. The judgment highlighted the importance of legal precedents and ongoing legal discussions in determining the appropriate course of action in matters of taxation and duty payment.