2005 (6) TMI 169 - AT - Central Excise

Summary

Issues:
Challenge to imposition of penalty under Order-in-Appeal No. 462/02 and Order-in-Appeal No. 6/03 for two different companies, Motherson Sumi Electric Wires Ltd. and Araco Automotive Ltd., on the grounds of interest levied on additional duty paid through supplementary invoices and reclassified tariff rates.

Analysis:
In the case of Motherson Sumi Electric Wires Ltd., the appellants paid duty based on the price of copper supplied as raw material. Upon revision of copper prices by the supplier, the final product prices were adjusted accordingly, leading to additional duty payment through supplementary invoices. The Revenue demanded interest on this additional duty, citing Rule 173G. The issue revolved around whether Rule 173G, which primarily focuses on fortnightly duty payments, applies to such situations. The Counsel argued that Rule 173G(1)(d) specifically refers to failure to pay duty by the due date related to fortnightly payments, and does not cover scenarios like the one in this case. The Tribunal agreed, stating that the rule does not provide for interest in circumstances involving payment adjustments due to price revisions, leading to the acceptance of the appellants' plea and allowing the appeal.

In the case of Araco Automotive Ltd., the goods were reclassified, and differential duty was paid based on the reclassified tariff rates. Similar to the previous case, the Revenue sought interest on this differential duty under Rule 173G. The crux of the issue was whether Rule 173G's provisions on interest for failure to pay duty by the due date, related to fortnightly payments, were applicable in this context. Both Counsels contended that the rule's language does not encompass situations where duty adjustments are made due to reclassification. The Tribunal concurred, emphasizing that Rule 173G does not address interest in scenarios like these. Consequently, the Tribunal ruled in favor of the appellants, allowing the appeal with any consequential relief.

In conclusion, the Tribunal's judgment highlighted the limited scope of Rule 173G regarding interest on duty payments, specifically tailored for fortnightly payment scenarios approved by the Commissioner. The absence of provisions for interest in cases involving duty adjustments due to price revisions or reclassification led to the acceptance of the appellants' arguments and the allowance of their appeals.