2001 (9) TMI 135 - AT - Central Excise

Summary

Issues:
1. Demand of interest under Section 11AB of the Central Excise Act
2. Imposition of penalty under Section 11AC of the Act

Analysis:
Issue 1: The appellant, a company engaged in manufacturing, filed a declaration under Rule 173C of the Central Excise Rules, claiming assessable values for tubes and flaps under two sets - one for dealers under a specific scheme and another for other dealers. A show cause notice was issued alleging inadmissible discount deductions, leading to a demand for excise duty. The adjudicating authority initially disallowed the deduction but later confirmed a duty demand on the discount not passed on to dealers. However, the appellate tribunal found that the appellant had not willfully suppressed facts to evade duty, attributing the delay in passing on discounts to a genuine reconciliation process. Consequently, the demand for interest under Section 11AB was deemed unsustainable.

Issue 2: The imposition of penalty under Section 11AC was also challenged by the appellant. The tribunal noted that for penalties to apply, there must be evidence of willful suppression to evade duty. In this case, the tribunal found no sufficient material to support such a claim. As a result, the imposition of the penalty was deemed legally unsustainable. The tribunal set aside the impugned order, allowing the appeal in favor of the appellant.

The judgment highlights the importance of proving willful suppression of facts with intent to evade duty to justify the demand of interest and imposition of penalties under Section 11AB and Section 11AC, respectively. In this case, the tribunal concluded that the appellant's actions were not indicative of such intent, as the delay in passing on discounts was attributed to genuine reconciliation processes rather than deliberate evasion.