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2014 (9) TMI 740 - AT - Central ExciseDemand of differential duty - appellant cleared certain quantity of sugar during November 1997 to December 1997 paying the concessional rate of duty applicable to levy sale sugar @ ₹ 52/- per quintal - Sale was treated as sale from “Free Sale Sugar” - Subsequently Directorate paid the differential amount of price between levy sale sugar and free sale sugar amounting to ₹ 46,17,427.28 which was received by the appellant in January 1999 - Assessee did not pay the differential duty of ₹ 5,17,473/- on the clearances of 15,681 quintals of sugar - Held that:- From a reading of the tariff description CETH 1701.30 under which the appellant cleared the goods were required by the Central Government to be sold under the provisions of Essential Commodities Act. In the present case though the Directorate of Sugar vide release order dated 30/09/97 and 27/10/97 had directed the appellant to release sugar of quantity of 16,587 quintal under levy sugar quota, subsequently, vide letter F. NO. 1-5/97 SC-II dated 20/10/1997 had directed that the sale be treated as free sale sugar and not as levy sugar. The goods were cleared during November to December 97 and therefore, at the time of clearance of the goods, the goods were treated as free sale sugar and not as levy sugar. Further, vide letter dated 11/12/98, the appellant/assessee was paid differential amount of price between levy sugar and free sale sugar amounting to ₹ 46,17,427.26 and therefore, clearances of sugar was under free sale quota and therefore, the discharge of duty liability on such clearance under levy sugar quota was not in accordance with law. Similarly, interest was demanded under Section 11AB and penalty was sought to be imposed under Rule 173Q read with Section 11AC. Though, the Central Excise Rules, 1944 were substituted by Central Excise Rules, 2002, the provision for demand of duty short paid, not paid or erroneously refunded is Section 11A of Central Excise Act, which was in existence both in 1997 as well as in 2002. Similarly, the provisions for demand of interest invoking Section 11AB is also correct as the said provision was in existence both at the time of clearance a well as at the time of issue of show-cause notice. Therefore, it is incorrect to say that the notice was issued under non-existent provision. It is clear from the records that when the Directorate of Sugar converted the release from levy sugar into free sale quota, the said fact was never intimated to the department by the appellant. Further, even when the consideration was received for the clearances of sugar under free sale quota, the appellant did not inform the department of the receipt of enhanced consideration. Therefore, there was a suppression or willful mis-statement of fact on the part of the appellant as alleged in the show-cause notice and therefore, the invocation of extended period of time is clearly sustainable. Interest is applicable when there was a short payment for the delay in payment of duty. In any case, interest is a compensatory payment for the delay in payment of duty. Accordingly, whenever there is a delay in payment of duty, interest liability has to be discharged from the due date of payment till the actual date of payment. However, penalty is set aside - Decided partly in favour of assessee.
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