Tribunal sets aside penalty, orders fresh decision on duty interest, emphasizes right to be heard.

The Tribunal partially allowed the appeal by setting aside the penalty and remanding it for a fresh decision. The appellant was directed to pay the interest on duty within 30 days, with the stay extension application being dismissed. The Tribunal stressed the importance of providing the appellant a reasonable opportunity to be heard on the penalty issue during the fresh decision by the lower appellate authority.

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Issues:
Challenge to demand of interest under Section 11AB of the Central Excise Act and penalty equal to duty imposed under Section 11AC.

Analysis:
1. Background and Single Registration Issue:
The appellant challenged the demand of interest and penalty on the amount of differential duty paid in 2004. The appellant company had two manufacturing units, and a dispute arose regarding single registration. The appellant contended that plant II could claim exemption under Notification 67/95-C.E., thus not liable to pay duty. However, the appellant voluntarily paid the duty before adjudication, which was accepted, making any exemption claim invalid.

2. Penalty and Revenue Neutrality:
The appellant argued for penalty waiver under Section 11AC due to revenue neutrality, citing Tribunal decisions. The SDR supported penalty imposition, referring to Supreme Court judgments. The Tribunal remanded the penalty issue to the lower appellate authority due to a finding beyond the show-cause notice scope.

3. Interest on Duty under Section 11AB:
The SDR relied on the Supreme Court's SKF India Ltd. case, emphasizing that interest under Section 11AB is applicable even if duty is voluntarily paid before adjudication. The Tribunal upheld the demand of interest on duty under Section 11AB, as per the SKF India Ltd. case ruling, rejecting other arguments and citations.

4. Final Decision:
The Tribunal partially allowed the appeal by setting aside the penalty and remanding it for fresh decision. The appellant was directed to pay the interest on duty within 30 days. The stay extension application was dismissed. The Tribunal emphasized giving the appellant a reasonable opportunity to be heard on the penalty issue during the fresh decision by the lower appellate authority.

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