2009 (11) TMI 443 - AT - Central Excise

Interest- Penalty- The issue related to delay in reversal of cenvat credit on input short received. The Appellant has challenged the Order of the Commissioner (Appeals) imposing penalty under Section 11AC and demanding of interest under Section 11AB, which were dropped by the Original Adjudicating Authority. Held that- in the light of the decision of Commissioner of Central Excise, Pune v. SKF Ltd. 2009 (93) RLT 237 (SC), wherein the Apex Court has held that interest payable on delayed payment for whatsoever is reason. Thus, confirm the demand of interest on delayed payment. In absence of mens rea, penalty under section 11AC of Act not imposable.

Summary

Issues:
Challenge against penalty and interest imposition under Section 11AC and Section 11AB respectively.

Analysis:
1. Facts of the Case: The Appellant purchased Steel Rounds from a supplier and sent them to a job worker for processing. Due to losses during processing, the Appellant issued debit notes to the supplier for short quantities received, leading to the reversal of CENVAT Credit as per Central Excise Act, 1944. A Show Cause Notice was issued for interest payment and penalty imposition.

2. Original Adjudicating Authority's Decision: The Authority dropped the proceedings, stating that duty was paid before the Show Cause Notice, making penalty inapplicable. Also, they found Section 11DD inapplicable regarding interest payment requirements.

3. Commissioner (Appeals) Decision: On appeal by the Revenue, the Commissioner set aside the original decision, holding the Assessee liable for interest under Section 11AB and confirming the penalty under Section 11AC.

4. Appellant's Arguments: The Appellant argued that Section 11DD was not applicable, penalty under Section 11AC was unjustified, credit denial was improper, and the extended period should not apply. They cited legal precedents to support their contentions.

5. Counter Arguments: The Respondent contended that interest and penalty were justified, citing legal cases to support their stance, and emphasized the duty liability admission by the Appellant.

6. Tribunal's Decision: The Tribunal agreed that mentioning a wrong law provision does not invalidate the Show Cause Notice. It confirmed interest payment demand but found no intention to evade duty payment, thus ruling out penalty imposition under Section 11AC. The Appellant's challenge on CENVAT Credit denial and limitation issues were dismissed due to not being raised earlier.

7. Final Ruling: The Tribunal partially allowed the appeal, confirming interest payment but setting aside the penalty under Section 11AC due to the absence of mens rea. The Appellant's contentions on credit denial and limitation were rejected for not being raised in time.

This detailed analysis highlights the key legal arguments, decisions, and the final ruling of the Appellate Tribunal in the case involving penalty and interest imposition under relevant sections of the Central Excise Act, 1944.