Tribunal rules on duty evasion case, interest payable under Central Excise Act

The Tribunal found that M/s. Shree Rohini Enterprises diverted raw materials without duty payment, constituting a shortage. While the delayed show cause notice was deemed improper, interest was held payable under the Central Excise Act. The Commissioner (Appeals) decision to exempt interest was overturned, with the Revenue's appeal allowed solely on the interest issue. Penalties were not imposed due to the delayed notice issuance.

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Issues involved: Clandestine removal of raw materials by a 100% EOU, demand of interest, invocation of extended period, imposition of penalty.

Summary:
1. The case involved M/s. Shree Rohini Enterprises, a 100% EOU, where a shortage of yarn was found during a surprise visit, leading to the payment of duty and subsequent show cause notice. The Commissioner (Appeals) held that no interest is payable and no penalties are imposable due to the delayed issuance of the notice.

2. The Revenue appealed against the decision, arguing that the case involved clandestine removal of raw materials by the EOU, justifying the demand of interest, invocation of extended period, and imposition of penalty.

3. The Tribunal found that the raw materials were diverted without payment of duty, constituting a shortage. As duty was paid early, the show cause notice issued after 5 years was deemed improper. However, interest was found to be payable as per the Central Excise Act, and the Commissioner (Appeals) was incorrect in exempting it. The appeal by the Revenue was allowed only on the issue of interest, upholding the Commissioner (Appeals) decision on other matters.

4. The appeal filed by the Revenue was disposed of accordingly.

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