2007 (5) TMI 441 - AT - Central Excise

Tribunal Upholds Duty Payment, Waives Penalties: Importance of Timely Payments & Book Examination Clause

The Tribunal upheld the demand for duty payment on account of price escalation but set aside the penalties and interest as the duties had been paid before ... Demand and penalty - Differential duty on escalation charges Issues:- Demand for differential duty on account of price escalation- Time-barred demand- Imposition of penaltiesAnalysis:- The appeals were filed against the Order-in-Original passed by the Commissioner of Central Excise & Customs, Belgaum, regarding the demand for payment of price escalation charges in contracts with the Indian Railways for Concrete Sleepers.- The impugned order demanded specific amounts for two contracts, which had already been paid before the Show Cause Notice was issued and were appropriated. Interest under Section 11AB and penalties under Section 11AC were imposed.- The Advocates argued that the demand was premature due to a pending matter with the Ministry of Finance and that it should be considered time-barred as the Show Cause Notice was issued after the relevant periods.- The Tribunal found that once the appellant received the escalation charges, they became liable for duty payment, regardless of the finalization of the Book Examination Clause by the Ministry of Finance. The duty demand had been paid before the Show Cause Notice, leading to the setting aside of penalties and interest.- The Tribunal cited precedents stating that penalties and interest are not applicable if duties are paid before the issuance of a Show Cause Notice, ultimately allowing the appeals on those terms.Conclusion:The Tribunal upheld the demand for duty payment on account of price escalation but set aside the penalties and interest as the duties had been paid before the Show Cause Notice was issued. The judgment highlighted the importance of timely duty payments and clarified the implications of the Book Examination Clause in such cases.