2017 (11) TMI 335 - AT - Central Excise

Interest - penalty u/r 173Q - short payment of duty due to wrong calculation of assessable value - Held that - the differential duty arose only due to wrong calculation of value which the appellant paid. The duty paid by the appellant was taken as cenvat credit by the sister concern which is recipient of the goods. Therefore the malafide intention is not proved - penalty not imposable and is set aside. Interest - Held that - the interest u/s 11AB is inevitable wherever there is a delay in payment of duty, interest is payable. Accordingly, demand of interest is upheld. Appeal allowed in part.

Summary

Issues:
Improper working of assessable value leading to short payment of duty, demand of interest and imposition of penalty, appeal against Order-in-Original, liability for penalty under Rule 173Q, charge of interest under Section 11AB.

Analysis:
The case involved a situation where a short payment of duty amounting to &8377; 23,084/- and &8377; 462/- occurred due to improper working of assessable value. Upon the department's pointing out, the duty amount was paid by the appellant, leading to a show-cause notice for demand of interest and penalty. The adjudicating authority confirmed the interest amount under Section 11AB of the Central Excise Act 1944 and imposed a penalty under Rule 173Q of Central Excise Rules 1944 and Rule 25 of Central Excise Rules 2001. The appellant, aggrieved by the Order-in-Original, appealed to the Commissioner (Appeals) who upheld the original order and rejected the appeal, prompting the appellant to approach the Tribunal.

In the absence of representation from the appellant, the Tribunal considered the grounds of appeal and submissions. It was noted that the appellant did not contest the differential duty paid, attributing it to a wrong calculation by the audit party, which was subsequently taken as cenvat credit by the receiving sister unit. The issue primarily revolved around the calculation of the correct assessable value, with no malafide intention established. The appellant had paid the duty, albeit under debate, and thus argued against the imposition of penalty.

The Revenue, represented by Shri Sanjay Hasija, supported the findings of the impugned order. After careful consideration, the Tribunal focused on the key issue of interest and penalty under Rule 173Q. It was observed that the differential duty arose due to a miscalculation, with the duty being utilized as cenvat credit by the sister concern receiving the goods. As no malafide intention was evident, the Tribunal ruled in favor of the appellant, setting aside the penalty. However, the demand for interest under Section 11AB was upheld, given the inevitable nature of interest payment in cases of delayed duty payments.

Consequently, the Tribunal modified the impugned order by setting aside the penalty while upholding the demand for interest. The appeal was partly allowed in the specified terms, with the pronouncement made on 26-09-2017.