2015 (10) TMI 2205 - AT - Central Excise

Manufacture and captive consumption of HR Strips - demand of duty denying the exemption under notification 67/95 dated 16.03.1995 - Imposition of penalty and interest - Held that - Where duty is demanded the appellant were required to pay a sum of ₹ 6,67,400/- whereas they are entitled for deemed credit during the period is ₹ 7,09,817/-. Therefore, the appellant have entitled more credit than the payment of duty. Moreover, appellant has paid excess duty of ₹ 17,640/- during the impugned period as per the calculations. In these circumstances, we hold that interest is not payable by the appellant. Further, in the absence of any mensrea on the part of the appellant penalty is not imposable which is evident that after allowing deemed credit to the appellants, appellant has paid duty in excess. Therefore, malafides were not proved against the appellant. In these circumstances, penalty is also not imposable - Demand of interest and penalty are not sustainable on the appellant - Decided in favour of favour of assessee.

Summary

Issues:
1. Demand of interest and imposition of penalty on the appellant.

Analysis:
The appellant appealed against an order demanding interest and imposing a penalty on them for various reasons. The case involved a show cause notice for demanding duty, disallowance of Cenvat Credit, and confiscation of HR Strips. The appellant manufactured HR Strips and claimed exemption under certain notifications. The Revenue contended that the appellant was not entitled to the exemption, leading to duty demands on HR Strips and MS tubes. The Tribunal previously remanded the matter back to the Adjudicating authority for re-determination of duty. In the subsequent proceedings, the appellant paid excess duty but interest and penalty were confirmed. The appellant challenged the demand of interest and penalty before the Tribunal.

The appellant argued that they had paid excess duty and were entitled to deemed credit, making the demand for interest and penalty unjustified. They relied on legal precedents to support their case, emphasizing that the time limit prescribed under the Act was not applicable in this scenario. They also pointed out the omission of certain provisions in the Central Excise Rules, making the adjudication unsustainable for the period in question. The appellant contended that there was no mens rea on their part, as they had paid duty in excess after considering the deemed credit.

After hearing both parties, the Tribunal considered the submissions and concluded that the demand for interest and penalty was not sustainable. The appellant had actually paid more duty than required, indicating no malafides on their part. Therefore, the Tribunal held that interest was not payable by the appellant, and no penalty was imposable due to the absence of any wrongful intent. The impugned order demanding interest and imposing a penalty was set aside, and the appeal was allowed in favor of the appellant.