2009 (12) TMI 342 - AT - Central Excise

Penalty- , the department issued a show-cause notice to the party for recovery of basic excise duty of Rs. 27,751.13 and special excise duty of Rs. 4,163.57 totaling to Rs. 31,920.00 as also for imposing penalty under Rule 173Q of the Central Excise Rules, 1944 on the ground that the goods had been clandestinely removed without payment of duty. Held that- the appellant is liable to pay interest on the aforesaid amount of duty for the period from 30-8-2003 to 16-11-2006 in terms of Section 11AA of the Central Excise Act. Insofar as the penal liability is concerned, it is not a fit case to interfere with the decision of the lower authorities inasmuch as the amount of penalty imposed on the appellant is a meagre Rs. 1,500/-. The appeals stand dismissed.

Summary

Issues:
1. Remission of duty on missing goods.
2. Demand of interest under Section 11AA.
3. Levy of penalty under Rule 173Q.

Remission of Duty:
The appellant, engaged in manufacturing inserts, reported missing goods from their bonded warehouse. The department issued a show-cause notice for recovery of duty and penalty, alleging clandestine removal. The original authority confirmed duty demand and imposed a penalty. The appellant's appeal to the Commissioner (Appeals) was pending when they received a letter rejecting remission application. The Tribunal found the appellant ineligible for remission citing a precedent where theft or dacoity did not qualify for remission. The appellant failed to prove theft, paid duty without protest, and only alleged theft. The disappearance of goods was admitted, leading to the confirmation of duty demand.

Interest under Section 11AA:
The appellant disputed the demand of interest under Section 11AA, arguing it was not expressly demanded in the show-cause notice. The SDR contended that interest follows duty determination under Section 11A(2) regardless of explicit demand. The Tribunal held that interest on duty is a statutory liability, payable by the assessee without specific demand. The appellant paid duty late, making them liable for interest from the due date in 2003 until the actual payment in 2006, as per Section 11AA of the Central Excise Act.

Penalty under Rule 173Q:
Regarding the penalty imposed on the appellant, the Tribunal found no reason to interfere as the amount was minimal at Rs. 1,500. Consequently, both appeals were dismissed by the Tribunal.

This judgment highlights the denial of remission due to lack of proof of theft, the statutory liability of interest on duty even without explicit demand, and the minimal penalty not warranting interference.