2017 (9) TMI 1549 - AT - Central Excise

Valuation - advance intermediary licence - includibility of additional consideration - interest - penalty u/s 11AC - Held that - the issue is no more res integra in view of the decision in the case of RELIANCE INDUSTRIES LTD. Versus COMMISSIONER OF C. EX. & CUS., RAJKOT 2008 (4) TMI 443 - CESTAT, AHMEDABAD , where it was held that the claim that the appellant was having a bona fide belief that the additional discounts are permissible has to be accepted and demand of duty has to be confined to duty within the normal period of limitation. No penalty will be justified - penalty set aside. Demand of interest prior to 11.05.2001 - Held that - the Tribunal has set aside the demand of interest for the period prior to 11.05.2001 in the case of AIA Engineering Pvt.Ltd. v. CCE, Ahmedabad-II 2014 (9) TMI 1033 - CESTAT AHMEDABAD - interest set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues involved: Appeal against penalty under Section 11AC of the Central Excise Act, 1944 and demand of interest under Section 11AB of the Act.

Analysis:

1. The appellant contended that they did not pay Central Excise duty on an advance intermediary license received from the buyer, believing it was not an additional consideration for assessable value. This belief was supported by a Tribunal decision until the Supreme Court's ruling on the matter. The appellant paid the differential duty before the Supreme Court's decision and argued against penalty under Section 11AC, citing no fraud or intent to evade duty. The appellant's stance was supported by various decisions.

2. The Advocate for the Revenue relied on a Supreme Court decision in a similar case. The Tribunal noted that the Supreme Court ruled against the assessee on the same issue, despite the duty being paid before the decision. The Tribunal referenced a previous case to support the appellant's claim that no penalty was justified under Section 11AC due to a bona fide belief.

3. The next issue addressed was the demand of interest prior to a specific date. The Tribunal referred to a case where interest demand was set aside for the period before that date. This decision was backed by judgments from the Gujarat and Karnataka High Courts. Consequently, the Tribunal found the demand of interest unsustainable.

4. Considering the above discussions, the Tribunal allowed the appeal filed by the appellant, ruling in their favor against the penalty under Section 11AC and the demand of interest under Section 11AB. The judgment was pronounced in open court on a specified date.