Full Judgment
2. The relevant facts of the case, in brief, are that on 30.12.2002, a theft/burglary took place in the factory premises of the appellants.
The appellant requested for remission of duty under Rule 21 of the Central Excise Rules, 2002 on the stolen goods, which have been rejected by the competent authority. A show cause notice was issued proposing demand of duty on the stolen goods. The appellant deposited the duty to close the matter before passing of the adjudication order.
So, the adjudicating authority appropriated the amount deposited by them and also directed to pay the interest under Section 11AB of the Central Excise Act, 1944. The Commissioner (Appeals) rejected the appeal of the appellant and observed that although this may not be the intention but fact remains that the goods have been removed from the factory without payment of duty. It is evident from the record that the demand of duty was proposed on stolen goods. It is noted that there is a contrary decision of the Tribunal as to whether remission of duty under Rule 21 of Central Excise Rules, 2004, is applicable on stolen/theft goods. It is revealed from the records as well as from the findings of the Commissioner (Appeals) that there is no fraud, suppression of facts, etc. The Division Bench of the Tribunal, in the case of Commissioner of Central Excise v. K.E.C. International Ltd. held that interest under Section 11AB of the Central Excise Act, 1944 is attracted only in cases involving fraud, suppression of facts, etc. In the instant case, there is no material of fraud, suppression of facts, etc. and therefore, recovery of interest under Section 11AB of the Central Excise Act, 1944 is not sustainable.
Accordingly, the impugned order insofar as the recovery of interest under Section 11AB of Central Excise Act, 1944 is set aside. The appeal is allowed.