2009 (7) TMI 409 - AT - Central Excise

Assessee have challenged the demand of interest under Section 11AB of the Central Excise Act on an amount of differential duty - appellant has also challenged the penalty equal to duty imposed on them under Section 11AC - In the instant case while the demand notice was pending adjudication the assessee voluntarily determined the amount of duty on the basis of CAS-4 and paid up under sub-section (2B) of Section 11A of the Act. The subsequent order off adjudication was accepted by them also. Held that this could not relieve assessee from their liability to ay interest for period from first date of month succeeding the month in which duty ought to have been paid till date of its payment - Therefore held that the demand of interest on duty under Section 11AB of the Central Excise Act is liable to be honoured by the appellant. Since adjudicating authority was accepted by the assessee that order having become final and binding on the assessee it is not open to them to say that they were not liable to pay duty on the goods by virtue of any exemption notification. - The show-cause notice in question alleged that the appellant was liable to pay penalty under Section 11AC of the Act for wilful contravention of Rule 7 of the Central Excise Rules 2002. Adjudication order while upholding it finding additional ground for penalty on mis-declaration of value - This finding of the lower appellate authority is beyond the scope of the show-cause notice. Nevertheless there is no appeal by the department nor is there any plea by the appellant that the decision of the lower appellate authority on the penalty-related issue is beyond the scope of the show-cause notice. In this scenario I am of the considered view that the penalty-related issue should be remanded to the lower appellate authority. Thus appeal is allowed partly

Summary

Issues:
Challenge to demand of interest under Section 11AB of the Central Excise Act and penalty equal to duty imposed under Section 11AC.

Analysis:
1. Background and Single Registration Issue:
The appellant challenged the demand of interest and penalty on the amount of differential duty paid in 2004. The appellant company had two manufacturing units, and a dispute arose regarding single registration. The appellant contended that plant II could claim exemption under Notification 67/95-C.E., thus not liable to pay duty. However, the appellant voluntarily paid the duty before adjudication, which was accepted, making any exemption claim invalid.

2. Penalty and Revenue Neutrality:
The appellant argued for penalty waiver under Section 11AC due to revenue neutrality, citing Tribunal decisions. The SDR supported penalty imposition, referring to Supreme Court judgments. The Tribunal remanded the penalty issue to the lower appellate authority due to a finding beyond the show-cause notice scope.

3. Interest on Duty under Section 11AB:
The SDR relied on the Supreme Court's SKF India Ltd. case, emphasizing that interest under Section 11AB is applicable even if duty is voluntarily paid before adjudication. The Tribunal upheld the demand of interest on duty under Section 11AB, as per the SKF India Ltd. case ruling, rejecting other arguments and citations.

4. Final Decision:
The Tribunal partially allowed the appeal by setting aside the penalty and remanding it for fresh decision. The appellant was directed to pay the interest on duty within 30 days. The stay extension application was dismissed. The Tribunal emphasized giving the appellant a reasonable opportunity to be heard on the penalty issue during the fresh decision by the lower appellate authority.