2010 (6) TMI 389 - AT - Central Excise

Demand of interest - period related is April 2005 to September 2005 the investigation took place on 19/20-9-2005 and the assessee paid the duty immediately on pointing out by the department but the department did not issue the show cause within one year which was issued only on 8-12-2006 - no allegation in the show cause notice with regard to suppression of facts misstatement fraud collusion etc. Hence the show cause notice issued beyond one year time barred

Summary

Issues:
Appeal against confirmation of interest and dropping of penalty.

Analysis:
The case involved an appeal against the order of the Commissioner (Appeals) where interest demand was confirmed but penalty against the assessee was dropped. The assessee, engaged in manufacturing PSC Sleepers, had charged an amount towards reimbursement of freight charges but did not include it in the assessable value of sleepers. The Central Excise Officers noticed this during scrutiny, leading to a show-cause notice for interest payment and proposing a penalty. The adjudicating authority confirmed both, which was appealed by both parties.

The Revenue argued that interest is chargeable for delayed payments without any limitation period, citing a Supreme Court case. They contended that penalty equal to duty was imposable due to suppression of facts to evade duty. On the other hand, the assessee argued that the show-cause notice for interest and penalty was time-barred, citing relevant case laws. They emphasized that no penalty could be imposed without allegations of willful misstatement or suppression of facts, relying on judicial precedents.

After considering the submissions, the Tribunal found the issue to be whether the show-cause notice issued was time-barred. Referring to previous judgments, the Tribunal held that in the absence of misstatement or suppression of facts, a time-barred show-cause notice cannot lead to penalty imposition. The Tribunal dismissed the Revenue's appeal based on the time limitation for interest recovery and lack of allegations in the show-cause notice. The Tribunal allowed the assessee's appeal, emphasizing that a time-barred notice precluded penalty imposition.

In conclusion, the Tribunal allowed the assessee's appeal while rejecting the Revenue's appeal, highlighting the importance of timely issuance of show-cause notices and the necessity of specific allegations for penalty imposition. The judgment was pronounced on 21-6-2010.