2010 (3) TMI 985

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al Excise Act. The appellant was engaged in the manufacture of cold-rolled/hot-rolled sheets, and mild steel plates during the material period. During the period from October 2000 to June 2001, they cleared their products to a sister unit on payment of duty. The department upon investigations found that the appellant had undervalued the goods by not taking into account the operational cost under Rule 8 of the Valuation Rules while determining the assessable value of the goods cleared to the sister unit. Accordingly, differential duty of over Rs. 80 lakhs was demanded for the said period in a show-cause notice dated 8-11-01 wherein a demand of interest on duty under Section 11AA of the Act was also raised besides a proposal for imposing pena....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....uty on the subject goods, they paid the amount of duty in a gesture of fairness. However, the appellant has a strong case against the penalty in as much as they had no mala fide intention to evade payment of duty as found by both the lower authorities. It is further submitted that, as Cenvat credit of any duty paid by the appellant on the subject goods would be available to their sister unit, there was a revenue-neutral situation, wherein it could not be alleged that the appellant had intention to evade payment of duty. On the penalty-related issue, the ld. counsel has claimed support from Nagpur Alloy Castings Limited v. Collector of Central Excise [2002 (142) E.L.T. 515 (S.C.)] wherein the Supreme Court held that the imposition of penalty....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....oid levy of interest on duty under Sec. 11AA of the Act on the ground of such duty having been paid within the period prescribed under Sec. 11AA (1) of the Act. In other words, the duty paid is a payment for ever. In this scenario, we need only to consider the issues relating to penalty imposed under Rule 173Q and interest on duty, demanded under Sec. 11AA. 5. Under sub-section (1) of Sec. 11AA of the Act, as this provision stood at the material time, an assessee who fails to pay the duty determined under sub-section (2) of Sec. 11AA of the Act, within 3 months from the date of determination of duty is bound to pay interest at the prescribed rate for the period of delay. Sub-section (2) says that sub-section (1) is not applicable where t....