2018 (4) TMI 465 - AT - Central Excise

Conclusion of proceedings - proviso to section 11A(2) of Central Excise Act, 1944 - shortage of interest - contention of the appellant is that they had discharged the duty liability on 20th June 2014, along with applicable interest and 25% of the mandatory penalty, in consequence of which the proceedings against them should have concluded - Held that - The notification enhancing the rate of interest superseded the existing rate which was allowed to continue only for the limited purpose of as respects things done or omitted to be done before such supersession implying that the erstwhile rate would apply only in relation to proceedings initiated before the enhanced rate came into effect. The interest liability discharged by the appellant falls short and renders them ineligible for the privilege of conclusion of proceedings - appeal dismissed - decided against appellant.

Issues:
1. Eligibility for concluding proceedings under proviso to section 11A(2) of Central Excise Act, 1944.
2. Imposition of redemption fine.
3. Computation of interest liability.

Issue 1: Eligibility for concluding proceedings under proviso to section 11A(2) of Central Excise Act, 1944:
The appeal by M/s Kalika Steel Alloys Private Limited challenges the order-in-appeal of Commissioner of Central Excise & Customs (Appeals), Nagpur, seeking to conclude the proceedings initiated against them in a show cause notice dated 13th May 2014. The appellant contends that they discharged the duty liability, interest, and 25% of the penalty on 20th June 2014, warranting the conclusion of proceedings. However, the proceedings were based on alleged illicit clearance of downstream products by their customer, leading to a show cause notice for recovery of duty on billets supplied without documentation. The appellant's plea revolves around the contention that the proceedings should have concluded post their discharge of duty liability.

Issue 2: Imposition of redemption fine:
The appellant argues that the redemption fine should have been set aside based on the decision of the Larger Bench of the Tribunal in Shiv Kripa Ispat Pvt Ltd v. Commissioner of Central Excise & Customs, Nasik. The Tribunal's decision highlighted the inapplicability of redemption fine when the goods in question were released without execution of any bond/undertaking, as per the Apex Court's judgment in Weston Components case. As the offending goods were not available due to illicit removal, the imposition of redemption fine was deemed untenable in line with the Tribunal's decision.

Issue 3: Computation of interest liability:
The appellant's claim for the conclusion of proceedings was rejected due to the non-fulfillment of interest liability discharge in full. The dispute arose concerning the rate of interest, with the appellant arguing that the former rate should apply as it prevailed at the time of default. However, the authorities justified their decision based on the notification enhancing the interest rate from 13% to 18% effective from 1st April 2011. The appellant relied on a decision by the Hon'ble High Court of Andhra Pradesh, but it was clarified that the enhanced rate would apply to defaults occurring after the amendment, and the erstwhile rate would only apply to proceedings initiated before the enhanced rate came into effect. Consequently, the appellant's interest liability fell short, rendering them ineligible for the privilege of concluding proceedings.

In conclusion, the Appellate Tribunal CESTAT MUMBAI upheld the duty liability, interest, and penalty in the impugned order while setting aside the redemption fine based on the inapplicability of the redemption fine in the absence of available offending goods and the incorrect computation of interest liability by the appellant.

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