2011 (1) TMI 1006

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....ctory premises of the respondent, and during the course of verification, some shortages of inputs were found. It was also noticed that the respondent has cleared the goods to their another unit on payment of duty but not as per Rule 8 of the Central Excise Valuation (Determination of price of Excisable goods) Rules, 2000. Therefore, the respondent was asked to pay differential duty on shortage of finished goods which the respondent paid along with the interest. Thereafter, a show-cause notice was issued to the respondent for an appropriation of the amount paid by the respondent. The adjudicating authority appropriated the duty demand and interest. He also imposed penalty of equivalent amount of duty under Section 11AC of Central Excise Act,....

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.....). He further submitted that the interest is also not payable by them as the clearances have been made by the respondent to their sister unit for carrying out for further processing the goods, the same were cleared by the respondent on payment of duty at a higher rate by the sister unit. In that event, the whole exercise of differential duty is revenue neutral and in such a situation, interest is not leviable. The learned Advocate further submitted that the provisions of Section 11AB is applicable of payment of interest w.e.f. 11.5.01 through the Finance Act, 2001 then the demand of interest shall be only from 11.5.01 onwards. Prior to 11.5.01, the respondent is not liable to pay any interest in the absence of non-inserting the provisions ....

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....issued later on so the short duty paid on the basis of supplementary invoices just merely paying the duty on later date, in this case, interest is payable.   7. Further, we find that the duty is payable at the time of clearance of the goods. In this case, the respondent has cleared the goods to their sister unit on payment of duty and they have admitted their liability of short payment of duty the question of revenue neutrality has gone. Hence, they are liable to pay interest on short payment of duty as held by the Hon'ble apex court in the case of SKF India Ltd. (supra). We find force in the contention of the learned Advocate that the provisions of Section 11AB of the Act came into force with effect from 11.5.2001. Hence, no intere....