By TIOL News Service

MUMBAI, MAY 13, 2013: DUTY liability of Rs.2,37,087/- was confirmed by the adjudicating authority along with equivalent penalty and interest thereon. This order was upheld by the lower appellate authority.

In appeal, the CESTAT set aside the penalty and the said decision was challenged by the Department. The Bombay High Court remitted the matter for denovo consideration in view of the apex court decision in Union of India vs. Rajasthan Spinning & Weaving Mills - (2009-TIOL-63-SC-CX).

The matter was heard recently by the Bench.

The appellant submitted that in the order of the adjudicating authority, interest payable by the appellant under Section 11AB was not computed and communicated to the appellant and, therefore the appellant should be given the benefit of reduced penalty @ 25% from the date of communication of interest amount. They also rely on the decision of this Tribunal in the case of Sonam Clock Pvt. Ltd. vs. Commissioner of Central Excise, Rajkot - (2011-TIOL-1893-CESTAT-AHM) in support of their above contention.

The Revenue representative submitted that the demands pertain to the period April, 1997 to December, 2000 and the provisions of giving benefit of reduced penalty of 25% came into force only on 12/05/2000 and, therefore question of allowing payment of penalty @ 25% does not apply to the facts of the case.

The Bench observed -

"5. I have carefully considered the submissions made by both the sides. In the present case, the duty demand was confirmed by the original adjudicating authority along with interest thereon. No doubt, quantum of interest has not been specified in the said order. The interest liability accrues from the due date of payment of duty till such time the payment is made. Inasmuch as the appellant had made only part payment and have not made the full amount of duty confirmed, the question of quantifying the interest amount does not arise since the date of payment of duty is not known. Interest is a consequential liability and has to be discharged by the appellant on his own whenever there is a default in payment of duty by the due date and, therefore, it cannot be said that in all cases of duty demand, the department should specify the interest amount also, especially when the date of payment of duty on a subsequent period is not known. Therefore, the contention of the appellant that the interest amount should be computed and should be communicated to them and, thereafter they will discharge the same within a period of 30 days from the date of such communication and the benefit of reduced penalty of 25% penalty should be allowed to them has no merit. Further, in the order-in-original itself, it has been made clear that if the appellant discharges the penalty of Rs.2,37,087/- along with interest within a period of 30 days from the date of issue of the said order the appellant would be eligible for reduced penalty of 25%. Thus, the appellant has already been given an opportunity of reduced penalty in the order-in-original itself. Hence, the question of giving the opportunity once again does not arise. The hon'ble apex Court in the case of Rajasthan Spinning & Weaving Mills (supra) held that mandatory penalty under Section 11AC is a punishment for an act of deliberate deception and, therefore, the said penalty cannot be reduced subsequently by an appellant authority."

Holding that there is no merit in the appeal, the same was dismissed.

(See 2013-TIOL-719-CESTAT-MUM)