2012 (4) TMI 137 - AT - Central Excise

Penalty imposed under Rule 25 of the Central Excise Rules, 2002 interest on differential duty arising on supplementary invoices not paid by assessee until SCN issued Held that - Assessee chose to pay the amount only after receipt of the show-cause notice. In the absence of satisfactory explanation of the default, it is held that appellant wanted to evade payment of interest which invite the penal provisions of Rule 25 Decided against the assessee.

Summary

Issues:
1. Waiver and stay of penalty imposed under Rule 25 of the Central Excise Rules, 2002.
2. Liability to pay interest on differential duty.
3. Appellant's intention to evade payment of interest.
4. Validity of penalty imposed on the appellant.

Analysis:
1. The appellant sought waiver and stay of a penalty of Rs.50,000 imposed under Rule 25 of the Central Excise Rules, 2002. The appeal was taken up after dispensing with pre-deposit.

2. The appellant, engaged in the manufacture of excisable goods, cleared goods based on the originally agreed price with buyers. Subsequently, they negotiated higher prices with buyers and issued supplementary invoices for the differential amount without paying interest on the differential duty. After a show-cause notice, the interest was paid in March 2010, as noted by the adjudicating authority.

3. The liability to pay interest was admitted by the appellant, as per the Supreme Court's judgment in Commissioner vs. SKF India Ltd. The main issue was the penalty imposed. The appellant argued that there was no intention to evade payment, citing Commissioner vs. Machino Basell India Ltd. The Revenue contended that the appellant's delay in paying interest indicated an intention to evade payment.

4. The Tribunal found that the interest was not paid even when pointed out by auditors, and the payment was made only after the show-cause notice. Despite a high interest amount of Rs.6,69,511, a penalty of Rs.50,000 was imposed. The Tribunal concluded that the appellant's conduct showed an intention to evade payment, justifying the penalty. The decision of the adjudicating authority was deemed fair, and the appeal was dismissed with the stay application disposed of.