2011 (9) TMI 902

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....n 11AB and 11AC of the Central Excise Act. Factual matrix : 2. M/s. SRF Limited [hereinafter referred to as 'the assessee'], were engaged in the manufacture of Nylon Tyre Cord fabrics falling under Heading No. 5902.10 of the Central Excise Tariff Act, 1985 and they were availing the facility of modvat/cenvat credit in respect of inputs/capital goods. On verification of records, the Department found that while clearing cenvat inputs to their other units, the assessee had availed excess amount of cenvat credit to the tune of Rs. 6,00,069/- in respect of procurement of capital goods during the year 2000-2001 and Rs. 2,75,038/- in respect of goods procured during the year 2001-02. It was further found that the assessee had taken 100%....

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....at in case duty was paid voluntarily before issuance of show cause notice, interest was not leviable. Accordingly, the appeal was allowed. Feeling aggrieved by the said order, the Revenue is before this Court. The Question : 5. The Revenue has raised the following substantial question of law :- "Whether or not the Appellate Tribunal was in error in holding that the penalty imposed under Section 11AC and the interest charged under Section 11AB of the Central Excise Act, 1944 are not sustainable if the duty is paid before issuance of show cause notice irrespective of the fact that evasion of duty was detected by the Department and the demand was made under the proviso to Section 11A(1) on reason of suppression of facts or contra....

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....any of the provisions of the Central Excise Act or the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty shall also be liable to pay penalty equal to the duty so determined. The assessee is also liable to pay interest for the period in question. 10. The CESTAT proceeded on the basis that in case the differential duty is paid even before issuance of show cause notice, no liability would be cast on the assessee to pay interest or cost. The CESTAT has followed the earlier decisions of the Tribunal in support of the stand taken to absolve the assessee from the liability to pay interest and penalty. 11. The Supreme Court in Union of India v. Rajasthan Spinning and Weaving Mills [JT 2....