2014 (10) TMI 927 - AT - Central Excise

Whether the appellant is required to pay the interest and penalty on differential duty paid by them when the show cause notice dated 22-4-2008 was issued to the appellant for the same issue beyond a period of 5 years where the duty demand itself is time-barred? Held that - the issue of valuation resulting in additional demand is interpretational as the appellant had voluntarily paid the differential amount and further the demand of interest and penalty have been clearly raised much after the relevant period taking into consideration the scheme of the Central Excise law and the limitation period prescribed for various purposes under different Sections and Rules a reasonable period of limitation would be six months or five years depending on whether there have been any suppression of facts etc. as held in case of Commissioner of Customs Madras v. T.V.S. Whirlpool Ltd. 1999 (10) TMI 701 - SUPREME COURT OF INDIA - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against Order-in-Appeal rejecting appeal against Order-in-Original imposing interest and penalty under Sections 11AB and 11AC of Central Excise Act, 1944.
2. Recovery of additional amount not included in assessable value.
3. Requirement to pay interest and penalty on differential duty beyond the time-barred duty demand period.
4. Legality of the show cause notice issued.
5. Interpretation of the Central Excise law on limitation period for interest and penalty.

Analysis:

1. The appellant, a Ltd. Company engaged in manufacturing, appealed against the rejection of the appeal against an order imposing interest and penalty under Sections 11AB and 11AC of the Central Excise Act, 1944. The appellant had recovered additional amounts not included in the assessable value, leading to a duty demand.

2. Central Excise Officers observed that the appellant had recovered additional amounts through debit notes on various charges not initially included in the assessable value. The duty payable on this amount was later paid by the appellant, but a show cause notice was issued beyond the time-barred duty demand period.

3. The key issue was whether the appellant was required to pay interest and penalty on the differential duty beyond the time-barred duty demand period. The appellant argued against the sustainability of the show cause notice, citing voluntary payment, lack of mala fide intent, and the interpretational nature of the additional demand issue.

4. The appellant contended that as the demand was beyond the five-year period under Section 11A of the Central Excise Act, the proposal to recover interest and impose a penalty was unsustainable. Citing a judgment, the appellant sought to set aside the order based on the limitation period.

5. After considering the contentions, the Tribunal found the issue of valuation leading to additional demand as interpretational. The demand for interest and penalty was raised well after the relevant period, and the Tribunal referred to the limitation period prescribed in the Central Excise law. Relying on a Supreme Court judgment, the Tribunal dismissed the appeal, quashing the demand for interest and penalty.

This detailed analysis covers the appeal against the imposition of interest and penalty, the recovery of additional amounts, the time-barred duty demand period, the legality of the show cause notice, and the interpretation of the Central Excise law on limitation periods for interest and penalty.