2006 (11) TMI 434 - AT - Central Excise

Demand of interest - Period of Limitation - different duty on sale of goods - impose penalty - HELD THAT - All the recoveries of sums due to the Government under the provisions of the Act and the rules could be affected u/s 11. Section 11A is a specific provision for recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded and the time-limit is fixed in the context of such recovery and not in the context of other recoveries which could be made u/s 11 of the Act. Therefore the notice to pay interest under Section 11AB cannot be tested on the anvil of the period of limitation prescribed u/s 11A in the context of the show cause notice for recovery of duty etc. There is no period of limitation prescribed for effecting recovery of interest u/s 11AB nor is there any period of limitation prescribed for exercising the power to recover the sums due to the Government u/s 11 of the Act. Therefore the learned Commissioner (Appeals) was clearly wrong in law when he set aside the interest liability of the respondent for the period from July 2001 to June 2002 which period was governed by the amended provisions of sub-section (2B) read with explanation 2 thereto of Section 11A which was brought into force with effect from 11-5-2001. Therefore the demand of interest for the said period from July 2001 to June 2002 is required to be confirmed and the impugned order of the Commissioner (Appeals) is set aside to that extent and the order-in-original will stand restored to that extent. The appeal is accordingly allowed with no order as to costs.

Summary

Issues:
- Appeal against order of Commissioner (Appeals) regarding demand of interest.
- Imposition of interest and penalty on the respondent.
- Applicability of limitation period for recovery of interest under Section 11AB.
- Interpretation of Section 11A and Section 11AB in relation to payment of duty and interest.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner (Appeals) challenging the setting aside of the demand of interest. The respondent, engaged in manufacturing iron and steel products, intimated the debit of differential duty but did not pay the accrued interest. A show cause notice was issued for recovery of interest under Section 11AB along with a penalty under Rule 25. The Appellate Commissioner held that since the duty amount was voluntarily paid before the notice, no interest or penalty could be imposed, citing precedent. The show cause notice for the period in question was also deemed time-barred.

2. The department argued that the respondent was obligated to pay interest under the amended law, especially for the period specified, regardless of the voluntary payment of duty. It was contended that the limitation period for issuing show cause notices did not apply to the recovery of interest under Section 11AB. The absence of the respondent during the hearing was noted.

3. The Tribunal found that interest was payable on the unpaid amounts as per Section 11AB, and the liability to pay interest arose even if duty was paid before the notice. The insertion of sub-section (2B) in Section 11A mandated interest payment from a certain date, irrespective of show cause notices. The Tribunal emphasized that Section 11A pertains to specific duty recoveries, distinct from interest recovery under Section 11AB, which has no prescribed limitation period. Consequently, the Commissioner's decision to set aside the interest liability for a specific period was deemed incorrect, and the demand for interest was upheld.

4. In conclusion, the Tribunal allowed the appeal, confirming the interest demand for the relevant period and overturning the Commissioner's decision. No costs were awarded in the matter. The judgment was pronounced in open court on a specified date.