2015 (5) TMI 245

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..... consideration:- 1) Whether the first respondent is justified in observing that according to settled law, neither any interest on duty can be levied under Section 11 AB nor any penalty can be imposed under Section 11 AC, where the duty was paid prior to the issuance of show cause notice inspite of legal provisions available under Central Excise Act, 1944? 2) Whether the first respondent is right in dismissing the petitioner's appeal by merely relying upon the decisions of the case law which are not applicable to the facts and circumstances of the present case?"                 2. The 2nd respondent is a manufacturer and service provider of computer peripherals .....

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..... preme Court in Union of India and others - Vs - Dharamendra Textile Processors & Ors. 2008 (231) ELT 3 (SC), wherein it was held that penalty under Section 11AC of the Central Excise Act is mandatory and there is no element of discretion. The relevant portion of the said decision reads as under: "26. In Union Budget of 1996-97, Section 11AC of the Act was introduced. It has made the position clear that there is no scope for any discretion. In para 136 of the Union Budget reference has been made to the provision stating that the levy of penalty is a mandatory penalty. In the Notes on Clauses also the similar indication has been given. 27. Above being the position, the plea that the Rules 96ZQ and 96ZO have a concept of discretion inbuilt c .....

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..... fore, the impugned orders passed by the Tribunal are set aside and the matters are remitted to the respective Tribunals for fresh consideration, in accordance with law, and in the light of this judgment...."                 7. The next limb pertains to the challenge to interest levied under Section 11AB of the Act, though the period is prior to the enactment of Finance Bill, 2001, to mean thereby, prior to 2001, Section 11AB was not applicable. The provisions of Section 11AB of the Central Excise Act came into effect from 28.9.1996 by Finance (No.2) Act, 1996. No doubt that in the year 2001, there is a change in the rate of interest from 11.5.2001 from 10% - 36% to .....

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