Tribunal overturns interest & penalty decision under Central Excise Act, citing early payment exemption.

The Tribunal set aside the Commissioner's decision to impose interest and penalty under Sections 11AB and 11AC of the Central Excise Act, 1944 on manufacturers of motor vehicle parts for unpaid duty. The Tribunal ruled in favor of the appellants, stating that payment made before the show cause notice exempted them from the imposition of interest and penalty, in line with Tribunal precedents. The department's argument of suppression did not hold, leading to the appeal being allowed.

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Issues involved: The liability to pay interest and penalty under Section 11AB and 11AC of the Central Excise Act, 1944 on unpaid duty for motor vehicle parts cleared by manufacturers.

Summary:
The appellants, manufacturers of motor vehicles and parts, cleared consignments without including packing costs in the assessable value, resulting in unpaid duty of Rs. 51,22,306. The Commissioner directed payment of interest under Section 11AB and imposed a penalty under Section 11AC. The appellants challenged this decision, citing Tribunal precedents where no interest or penalty was levied if duty was paid before a show cause notice.

The appellants argued that payment made before the notice precluded the imposition of interest and penalty, supported by Tribunal decisions. The department contended that allegations of suppression justified penalty, but had no rebuttal to the cited case law. The Tribunal found that since the duty was paid before the notice, no penalty or interest was warranted. The Commissioner's decision was set aside, and the appeal was allowed.

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