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2014 (3) TMI 277 - AT - Central ExciseDuty demand - Penalty u/s 11AC - Commissioner (Appeals) reduced penalty from equal amount of duty - During the period from October, 1997 to November, 1997 the manufacturer has cleared 1585 MTs of sugar on loan basis to M/s. Food Corporation of India (FCI) - The free sale sugar was cleared by discharging the duty liability, as the rate applicable to levy of sugar - Government of India vide order dated 29-11-1999 decided to treat the entire loan quantity of sugar as free sale sugar and reimbursed the price difference between the levy of sugar and Free Sale Sugar - the appellants received the differential amount in the month of November, 2001 - show cause notice was issued demanding duty along with interest and also proposing to impose penalty - Held that:- w.e.f. the 11-5-2001 the provisions of Section 11AB of the Central Excise Act were amended and the provisions of Section 11AB was made applicable in all situations wherever there was a short levy or short payment, etc., of duty. In view of this the applicants are liable to pay interest w.e.f. 11-5-2001 till the payment of differential duty. In respect of penalty the manufacturer is clearing sugar as per the directions to the Food Corporation of India as per the director of Government of India decided that the Free Sale Sugar which was cleared on loan basis as levy sugar to the Free Sale Sugar and subsequently decided reimbursed the differential duty treating the same as Free Sale Sugar - it is not a case for imposition of any penalty. In view of this the penalty imposed under Section 11AC of Central Excise Act, is set aside - Decided partly in favour of assessee.
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