2017 (10) TMI 1106 - AT - Central Excise

Interest - penalty - Valuation - Annual capacity based production - Compounded Levy Scheme - Held that - The Hon ble Apex Court in the case of Shree Bhagwati Rolling Mills 2015 (11) TMI 1172 - SUPREME COURT has held that the levy of interest and penalty are invalid, quashing the provisions of section 96ZO, 96ZP and 96ZQ - the demand of interest and penalties imposed are unsustainable - duty demand upheld - appeal allowed in part.

Summary

Issues Involved:
- Challenge to demand of interest and penalty imposed in relation to duty demand under Compounded Levy Scheme.

Detailed Analysis:

1. Background:
The appellants, manufacturers of Rerolled products of non alloy steel, opted to pay duty under the Compounded Levy Scheme. The Commissioner provisionally determined the Annual Capacity of Production (ACP) at 22755 MT, but the appellants did not discharge the duty liability according to this determination. Subsequently, a Show Cause Notice was issued, and the original authority confirmed the duty demand, interest, and penalty.

2. Legal Challenge:
During the hearing, the appellant's counsel did not contest the duty demand but challenged the interest and penalty imposed. Citing the case of Shree Bhagwati Steel Rolling Mills Vs. CCE, the counsel argued that the provisions under which interest and penalty were imposed had been quashed by the Hon'ble Apex Court, making the demand for interest and penalty unsustainable.

3. Arguments and Decision:
The appellant's counsel emphasized that they were only contesting the demand for interest and penalty. Following the precedent set by the Hon'ble Apex Court, the tribunal held that the levy of interest and penalty was invalid. Consequently, the demand for interest and penalties was set aside without disturbing the duty demand. One appeal was dismissed, while another was partially allowed, specifically setting aside the demand for interest and penalties.

4. Conclusion:
The tribunal disposed of the appeals by modifying the impugned order to exclude the demand for interest and penalties, maintaining the duty demand. This decision was based on the legal precedent established by the Hon'ble Apex Court regarding the validity of levying interest and penalties under the relevant provisions.

5. Final Disposition:
The appeals were accordingly disposed of, with the operative portion of the order pronounced in open court, emphasizing the setting aside of the demand for interest and penalties while upholding the duty demand under the Compounded Levy Scheme.