2013 (11) TMI 1611 - AT - Central Excise

Demand of interest - time limitation - Held that - Since the Show Cause Notice for demand of interest has been issued beyond the expiry of normal limitation period of one year the demand as such is time-barred - appeal dismissed - decided against Revenue.

Summary

Issues:
- Interpretation of exemption notification for concessional rate of duty
- Demand for interest on differential duty payment
- Application of limitation period for interest demand
- Adjustment of excess duty payment against interest demand

Interpretation of Exemption Notification:
The appellant, engaged in the manufacture of Flock Textiles, cleared fabrics at a concessional rate of duty under a specific notification. However, the notification prescribed the concessional rate only for interlining fabrics, not for Flock textiles. Despite representations made, a Show Cause Notice was issued for the differential duty paid. The Commissioner (Appeals) set aside the interest demand, stating that the duty paid on inter-lining fabrics was refundable, leading to the appeal by the Revenue.

Demand for Interest on Differential Duty Payment:
The Revenue challenged the Commissioner (Appeals) order, arguing that the interest demand should not have been dropped as the excess duty paid should have been claimed as a refund separately. The appeal contended that the adjustment made by the Commissioner (Appeals) was incorrect.

Application of Limitation Period for Interest Demand:
The respondent argued that the demand for interest under Section 11AB was time-barred as it was raised after the normal limitation period of one year. Citing a judgment, it was asserted that the demand for interest is subject to the limitation period for the demand of short-paid/non-paid duty.

Adjustment of Excess Duty Payment Against Interest Demand:
After considering submissions, the Tribunal noted that the demand for interest was time-barred as per the limitation period under Section 11A. The excess payment made by the respondent on inter-lining fabrics, eligible for concessional duty, was deemed as an adjustment against the interest demand. The Tribunal dismissed the Revenue's appeal, finding no infirmity in the Commissioner (Appeals) order.

This detailed analysis of the judgment highlights the issues of interpretation of the exemption notification, demand for interest on differential duty payment, application of the limitation period for interest demand, and the adjustment of excess duty payment against interest demand, providing a comprehensive overview of the legal proceedings and decisions made by the Tribunal.