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Appearance Shri Naveen Mullick, Advocate  for the Appellant.

Shri M.S. Negi, Authorized Representative (DR)  for the Respondent.

CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 54924-54925/2014 Dated : 11/12/2014 Per. Rakesh Kumar :-

The facts giving rise to these two appeals are, in brief, as under.
1.1 The appellant are manufacturers of plastic moulded furniture,a dutiable item and plastic dies which are fully exempted goods. Since, the appellant were using common Cenvat credit availed inputs for manufacture of dutiable as well as exempted final products and were not maintaining separate accounts and inventory of inputs meant for dutiable final products and exempted final products, in accordance with provisions of Rule 57CC during the period of dispute i.e. during 1997-1999 period, they were reversing an amount equal to 8% of the sale value of the exempted final products at the time of their clearances. The appellant, however, while paying an amount equal to 8% of the sale value of the exempted final products under the provisions of Rule 57CC of the Central Excise Rules, 1944,were recovering this amount from their customers. The Department was of the view that the amount equal to the 8% of the sale value of the exempted final product being paid by the appellant was in lieu of reversal of the Cenvat credit attributable to the inputs used in the manufacture of exempted final product and, therefore, the same amount being recovered by the appellant from their customers as excise duty would be payable by them to the Central Government in terms of the provision of Section 11D and since they have not paid the same, the same would be recoverable from them. It is on this basis that Jurisdictional Joint Commissioner, Central Excise vide order-in-original dated 31/08/01 confirmed the demand for an amount of Rs. 3,26,237/- against the appellant under Section 11D of Central Excise Act, 1944 and beside this, also demanded interest on this amount invoking the provisions of Section 11AB and imposed equal amount on the appellant under Section 11AC. On appeal being filed to Commissioner (Appeals) against this order of the Joint Commissioner, the Commissioner (Appeals), vide order-in-appeal dated 12/05/03 upheld the Joint Commissioners order. Commissioner (Appeals)s order, however, while specifically confirming the demand under Section 11D and imposition of penalty of equal amount under Section 11AC, was totally silent about levy of interest under Section 11AB.
6. The undisputed facts are that the appellant were using common Cenvat credit availed inputs for manufacture of dutiable final product and exempted final products and in respect of clearance of exempted final products, in accordance with the provisions of Rule 57CC of Central Excise Rules, were paying an amount equal to the 8% of the sale value. There is no dispute that this payment of an amount equal to 8% of the sale value of the exempted final product was towards reversal of the Cenvat credit attributable to the inputs used in or in relation to the manufacture of the exempted final products. There is also no dispute that the appellant were mentioning this amount being paid to the Government under Rule 57CC of the Central Excise Rules, 1944 in their invoice as modvat reversal and were recovering this amount from the customers. The Department was of the view that the amount of 8% of the sale value of the exempted final product being paid by them was in lieu of reversal of the Cenvat credit attributable to the inputs used in or in relation to the manufacture of exempted final product and not excise duty and that the amount of 8% being recovered by them from the customers would be required to be paid by them to the Government. It is on this basis that the demand of Rs. 3,26,237/- was confirmed against the appellant by the Joint Commissioner, alongwith interest on it under Section 11AB and penalty under Section 11AC. The Joint Commissioners order was upheld by the Commissioner (Appeals) only to the extent of demand under Section 11D and the penalty under Section 11AC. The CCE (Appeals)s order is silent about interest under Section 11AB and it is this order of CCE (Appeals) which was upheld by the Tribunal except for setting aside of penalty. The point of dispute is as to whether the appellant would required to pay interest on this amount under Section 11AB.