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TMI Blog2014 (11) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... of the goods with intent to evade payment of duty when the respondent has not disputed the descriptions of the goods as proposed by the Department and paid the duty? 3. Whether the Appellate Tribunal is correct in holding that since the respondent has now registered with the Excise Department and is following the procedures and hence the respondent can legitimately claim the benefit of Modvat credit on the yarns used in the manufacture of fabrics for the period in dispute? 3. The respondent/assessee are manufacturers of the industrial fabrics (cotton and nylon). The respondent classified the goods under Chapter Heading Nos. 52.08 and 54.06. The Department did not accept the said classification and classified the goods under Heading 59.11 of the Central Excise Tariff Act schedule (CETA Schedule). The period in question is from April 2001 to January, 2002 and during this period, the respondent had removed products without payment of excise duty by claiming benefit of exemption under a Notification. Since the Department did not agree with the classification of the product by the respondent/assessee, a show cause notice dated 5-4-2002 was issued pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty. Further, it pointed out that the assessee's claim to classify the goods under Chapter 22 was supported by decisions of the Tribunal and therefore, the ground raised by the department for levying interest cannot be sustained. 5. Learned Standing Counsel appearing for the Revenue reiterated the contentions raised in the memorandum of grounds of appeal and submitted that the Tribunal erred in deleting the penalty and interest and extending the benefit of Modvat credit, when the respondent/assessee was not registered with the Department during the relevant time. 6. Learned counsel appearing for the respondent/assessee seeking to sustain the order of the Tribunal submitted that the Larger Bench decision of the Tribunal has upheld the classification initially adopted by the respondent/assessee and therefore there was no intention to evade payment of duty and the Tribunal rightly deleted the penalty and the same is equally applicable to the demand for interest and therefore, prayed for conforming the order of the Tribunal. 7. As regards the claim for Modvat credit, it is submitted that since the goods in question were claimed to be exempted as per the Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notifications issued under these rules or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under Section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notification issued under these rules with intent to evade payment of duty, - then, all such goods shall be liable to confiscation and the producer or the manufacturer or registered person of the warehouse or a registered dealer as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or rupees ten thousand, whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice." In terms of the above Rule, it should be seen whether the ingredients such as fraud, collusion, wilful mis-statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty. Explanation-2 - Where the duty determined to be payable is increased or further increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, the interest shall be payable on such increased or further increased amount of duty. Penalty for short-levy of duty in certain cases." In terms of the above provision, whether any duty of excise has not been levied or paid or have been short levied by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, the person shall liable to pay duty as determined under sub-section (2) of Section 11A shall in addition to the duty, be liable to pay interest. Therefore, the liability to pay interest would arise in case where there has been a delayed payment of duty as determined under Section 11A(2) of the Act, which was with an intention to evade payment of duty and in such circumstances, the assessee would be liable to pay interest. 15. In the preceding paragraphs, we have held that there was no intention on the part of the assessee to evade payment of dut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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