APCPDC LTD. Vs. COMMISSIONER OF C. EX., TIRUPATHI

JUDGEMENT

(1.) M /s. PSCC Pole Centre, APCPDC Ltd. manufactures PSCC Poles falling under Chapter sub -heading No. 6807.90 of the Central Excise Tariff Act, 1985 for captive consumption. During the period from 1 -7 -2000 to 31 -3 -2005, the assessee cleared PSCC poles manufactured discharging duty based on their cost of production. As per Rule 8 of the Central Excise (Valuation) Rules, 2000, the assessee was required to discharge duty liability on poles manufactured and cleared for captive consumption on 115% of the cost of production till 4 -8 -2003 and on 110% of the cost of production with effect from 5 -8 -2003. The assessee short paid a total amount of Rs. 2,45,329/ - during the material period. Adjudicating a notice issued to them, after due process the original authority demanded an amount of Rs. 2,45,329/ - being differential duty short paid under Section 11A of the Central Excise Act, 1944 (the Act) along with applicable interest on the short paid duty under Section 11AB of the Act and appropriated an amount of Rs. 1,98,218/ - paid by them before issue of show cause notice. A penalty equivalent to the duty demand was imposed on APCPDC under Section 11AC of the Act.

(2.) VIDE the impugned order, the Commissioner (Appeals) sustained the demand of duty, interest as well as penalty imposed. The appellants have challenged the impugned order. They submitted that they had submitted periodical returns and the demand of differential duty invoking longer period of limitation was not sustainable. As they had paid above 80% of the duty due before issue of show cause notice, no interest could be demanded from them nor any penalty be imposed on them. They relied on several case law in support of the claim that penalty and interest were not sustainable. During hearing, the learned Counsel for the appellants did not press the challenge against the demand of duty. We have also heard the learned SDR who defends the impugned order.

(3.) WE have carefully considered the facts of the case and rival submissions. There is no dispute about the duty liability as confirmed in the impugned order. We observe that the Commissioner (Appeals) had found that short payment had occurred owing to the ignorance of the appellants. In view of this finding, the penalty imposed under Section 11AC of the Act on the appellants affirmed by him is liable to be set aside. As regards the demand of interest, Section 11AB of the Act mandates that an assessee shall pay any amount of duty short paid or not paid by it on demand along with applicable interest. Therefore we find that the demand of interest affirmed by the Commissioner (Appeals) is in accordance with law. In the circumstances, we sustain the demand of duty and interest and vacate the penalty imposed on the appellants. The appeal is thus partially allowed.