2017 (11) TMI 1431 - AT - Central Excise

Demand of interest and penalty - failure to pay duty as per Compounded Levy Scheme - Held that - the issue in dispute stands covered by the judgment of the Hon ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills 2015 (11) TMI 1172 - SUPREME COURT , wherein the Hon ble Apex Court has struck down 96ZO, ZP and ZQ of the erstwhile Central Excise Rules, 1944 - interest and penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty liability under Compound Levy Scheme for the manufacture of specific steel products.
2. Failure to pay duty leading to a show cause notice (SCN) for duty demand, interest, and penalty.
3. Appeal against the penalty and interest upheld by the Commissioner (Appeals).
4. Applicability of the judgment in the case of Shree Bhagwati Steel Rolling Mills on the penalty and interest aspect.

Analysis:
1. The appellants were involved in manufacturing Rods & Bars of Iron and Steels falling under Chapter Heading 7214.90 and Angles & Shapes of non-alloy steel falling under 7216.10 of CETA, 1985, under the Compound Levy Scheme effective from 01.09.1997. The Commissioner of Central Excise provisionally determined the annual production capacity of the unit as per the Hot Steel Re-rolling Mills Annual Capacity Determination Rules 1997, directing the duty discharge.

2. A show cause notice (SCN) was issued due to the appellant's failure to pay the duty under the compounded levy for the period between November 1998 to March 2000. The SCN proposed duty demand at a specific rate per month along with interest and the imposition of penalty for contravention of Rule 96ZP of CER.

3. The adjudicating authority decided the duty demand based on an interim order of the Hon'ble Apex Court in a related case. Subsequently, the authority confirmed the penalty and interest proposed in the SCN. Upon appeal, the Commissioner (Appeals) reduced the penalty but upheld the interest, leading to the current appeal.

4. The appellant's representative relied on the judgment of the Hon'ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills, which deemed the mandatory penalty equivalent to duty demand as unsustainable and violative of certain constitutional articles. The Assistant Commissioner agreed with the findings in the impugned order and acknowledged the Apex Court's stance on the levy of interest and penalty.

5. After hearing both sides and examining the records, the Tribunal found that the issue at hand was covered by the judgment in the case of Shree Bhagwati Steel Rolling Mills. The Tribunal upheld the impugned order but set aside the penalty and interest aspects based on the Apex Court's decision regarding specific Central Excise Rules.

6. Consequently, the appeal was allowed, and the penalty and interest aspects were set aside, in line with the judgment referenced in the case of Shree Bhagwati Steel Rolling Mills.

This detailed analysis of the judgment provides a comprehensive overview of the legal issues, arguments presented, and the final decision rendered by the Appellate Tribunal CESTAT CHENNAI.