2007 (9) TMI 153 - AT - Central Excise

Change in policy of Ministry of food to treat clearance of levy sugar on loan as free sugar Decided that manufacturers will pay differential duty on basis of difference in price of levy and free sugar Differential duty was paid late so interest is payable but penalty is unsustainable

Summary

Issues:
Appeal against setting aside penalty and interest under Section 11AC of the Central Excise Act on late payment of duty.

Analysis:
The Revenue filed appeals against orders setting aside penalty and interest under Section 11AC of the Central Excise Act. The Revenue argued that late payment of duty necessitates interest payment under Section 11AB and mandatory penalty under Section 11AC. The respondents, engaged in sugar manufacturing, cleared sugar based on Ministry orders, later treated as free sugar. After representations and reimbursements, duty was paid on 22-12-99. The respondents claimed no delay in duty payment and no intent to evade, thus opposing interest and penalty. The Tribunal found that duty payment post-due date warranted statutory interest from Feb. 1999 till payment date. Orders setting aside interest were unsustainable, so the adjudication order was upheld.

Penalty Issue:
Regarding penalty under Section 11AC, no evidence showed the appellant intended to evade duty payment. Thus, the case did not warrant penalty imposition under Section 11AC. Appeals against penalty were dismissed. Respondents' cross-objections supporting their contentions were also disposed of accordingly.

This judgment highlights the importance of timely duty payment to avoid interest liabilities and the necessity of proving intent for penalty imposition under Section 11AC of the Central Excise Act.