Heard both sides.
2. The brief facts of the case as recorded in Appeal No. E/485/2010 are as follows:-
“2. During the course of audit of accounts of the assessee by the Internal Audit Party attached to this department, it was noticed that the assessee had collected an amount of Rs. 1,01,74,796/- from Ekadantha Synthetics, Bhiwandi towards additional conversion charges for the period from 1.4.2005 to 31.12.2005 through debit notes Nos.19A to 140A. As per Rule 6 of the Central Excise Valuation (Determination of Assessable Value) Rules, 2000, the assessee had to pay duty on the additional conversion charges collected from Ekadantha Synthetics, Bhiwandi as the amount collected over and above the value shown in the Central Excise invoices raised for clearance of the goods is includible in the transaction value as additional consideration of sale of the goods. When it was pointed out by the Audit Party, the assessee paid duty amount of Rs.8,13,984/- and Education Cess of Rs.16,280/- in RG23A Part II on 27.02.2007. When the assessee was required to pay interest for the delayed payment by the Range Officer vide his letter O.C.No.498/2007 dated 10.4.2007, the assessee informed vide letter dated 7.5.2007 that as they had paid the entire duty amount before issue of show cause notice, they are not liable to pay any interest. Under these circumstances, the Assistant Commissioner of Central Excise, Madurai I Division issued a Show Cause Notice to the assessee on 1.8.2007 demanding differential duty of excise of Rs.8,13,984/- and Education Cess of Rs.16,280/- on the additional conversion charges received from Ekadantha Synthetics, Bhiwandi with interest of Rs.1,67,658/-. It was also proposed to appropriate the amount debited in RG23A Part II on 27.2.2007 towards the above demand and impose penalty under Section 1 1AC of the Central Excise Act, 1944 (in short ‘the Act’).
“3. The adjudication was taken up by the Joint Commissioner of Central Excise, Madurai as per the Corrigendum dated 6.8.2007 issued from file C.No.V/52/15/19/2007 Adjn. After due process of law, the Joint Commissioner, vide 010 No.02/2008-CE dated 27.02.2008 confirmed the demand of duty of Rs.8,30,2641- and appropriated the amount already paid towards the demand. He also ordered for collection of interest of Rs. 1,65,602/- under Section 1 lAB of the Act and imposed penalty of Rs.8,30,264/- under Section 1 1AC of the Act.
“4. Aggrieved by the above order, the assessee filed an appeal with the Commissioner (Appeals), Madurai. The Commissioner (Appeals) vide Order-in-Appeal No.139/2010 dated 30-04-2010, has modified the impugned Order-in-Original to the extent that he has upheld the demand of duty, order for appropriation of amount, demand of interest but set aside the penalty imposed under Section 1 IAC of the Act.
“5. The above Order-in-Appeal No.139/2010 dated 30.04.2010 was taken up for review by the Committee of Commissioners, who found the order not acceptable as the said Order-in-Appeal was not legal and proper.”
3. The appellant-assessee has come in appeal against the impugned order of the lower appellate authority challenging the demand of interest and the Department has come in appeal against the very same order challenging waiver of the penalty.
4. Ms. Uma Maheshwari, learned Advocate appearing for the appellant-assessee states that the appellants were not aware that duty was required to be paid in respect of the additional amounts but as soon as the duty liability was pointed out to them after audit, they have promptly paid the duty amount. As such, there is no justification for demand of interest and since the appellants had entertained a bona fide belief that duty was not payable, the penalty is not imposable especially when the lower appellate authority has given a finding that this is not a case involving intention to evade payment of duty warranting imposition of penalty under Section 11AC.
5. Shri C. Rangaraju, learned SDR appearing for the Department states that this is a case where the assessees have recovered some amounts through invoices and some amounts raising debit notes in respect of the same consignments not after a long gap of time but almost concurrently. Thus, there is a clear suppression by the appellants as they have received extra money for the very same consignments but have not taken the same into account for paying the central excise duty. This has been done only for evading payment of duty and only when the departmental officers after auditing the accounts have pointed out the escapement of duty, the appellants have paid the duty amount at a later point of time. He also states that the appellants have not challenged the application of longer period of limitation which has been invoked on the ground of suppression etc. and they are not challenging the duty demand. Hence, on the very same ground, penalty is imposable under Section 11AC.
6. After hearing both sides, I find that this is a not case of the type dealt with by the
Hon’ble Supreme Court in the case of CCE, Pune Vs. SKF India Ltd. - 2009 (239) ELT
385 (SC) where extra amounts have been collected on the ground of escalation after a lapse of time and the duty has been paid. Even in those cases, the Hon’ble Supreme Court held that interest is payable on the additional amount with effect from the date the duty was originally payable while holding that penalty was not leviable in such cases. The facts in this case are totally different. The appellants have collected additional amounts almost concurrently by issuing debit notes without raising second invoices. The extra amounts received have not been shown to the Department and no duty has been paid on receipt of the extra amounts. This is a clear case of suppression with intention to evade payment of duty. Such a case warrants application of extended time limit for issue of demand, the payment of interest as well as imposition of penalty under Section 11AC of the Act. I take note of the fact that the appellants have not challenged the demand issued invoking extended period but instead the duty amounts have been paid subsequent to the departmental authorities pointing out the fact of non-payment of duty on the additional amounts collected. As such, the demand of interest as upheld by the lower appellate authority is confirmed. However, waiver of the penalty by the lower appellate authority is set aside and the impugned order is modified to that extent. The penalty imposed by the original authority is restored.
7. Appeal No. E/463/2010 filed by the assessee-appellant is dismissed and Appeal No. E/485/2010 filed by the Department is allowed in the above terms.