Tribunal sets aside interest & penalty demands under Central Excise Rules

The Tribunal allowed the appeal, setting aside the order demanding interest under Section 11AB and penalty under Rule 173Q of the Central Excise Rules, 1944. It was held that interest could not be demanded as Section 11AB was not in force during the relevant period. The penalty under Rule 173Q was deemed inapplicable due to the absence of a saving clause and specific non-compliance clause. The appellant's challenge was successful, resulting in the rejection of the interest and penalty demands.

---

---

Issues:
Appeal against demand of interest under Section 11AB and penalty under Rule 173Q of Central Excise Rules, 1944.

Analysis:
The appellant, a manufacturer of super enameled copper wire, faced a demand for interest under Section 11AB and a penalty of Rs. 3 lakhs under Rule 173Q of Central Excise Rules, 1944. The case involved the clearance of goods without duty payment and issuing invoices without supplying goods to enable buyers to avail Cenvat credit fraudulently. A search revealed incriminating documents leading to a show cause notice for duty demand on bogus invoices, interest, and penalty. The Tribunal remanded the matter for quantification, where the demand was reduced after giving SSI exemption benefit. The appellant had paid a portion before the notice, and the remaining amount was demanded along with interest and penalty. The appellant challenged the order.

The appellant argued that during the relevant time, Section 11AB was not in force, so interest could not be demanded. Additionally, Rule 173Q was superseded without a saving clause, making the penalty inapplicable. The penalty was also contested for lack of specifying the non-compliance clause. The AR supported the impugned order, stating the offence warranted the penalty. After hearing both sides, the Tribunal found that interest demand under Section 11AB was not valid as the provision was not in force during the period in question. Regarding the penalty under Rule 173Q, it was observed that the goods were not liable for confiscation, and no specific clause was cited for imposing the penalty, leading to its dismissal based on legal precedents.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal by rejecting the demand for interest and penalty. The decision was made after considering the arguments and records presented by both parties.

---