2012 (10) TMI 70 - AT - Central Excise

Interest - leviability of interest on the assessable value appearing in supplementary invoices - period of limitation Held that - Interest being consequence of levy and no limitation being prescribed by Section 11AB of Central Excise Act, 1944 - periodicity of default that was well known to appellant and the appellant willfully defaulted to make payment of interest - demand of duty being paid for the default period, interest became payable for no time bar proceeding - appeal is dismissed

Summary

Issues:
1. Whether recovery of interest on supplementary invoices for the years 2005-06 to 2008-09 is time-barred.
2. Whether the levy of interest on supplementary invoices is legally binding and not subject to limitation.
3. Whether the decision of the Tribunal in a previous case regarding limitation applies to the current case.

Issue 1:
The appellant argued that the interest demanded on supplementary invoices for the years 2005-06 to 2008-09, amounting to Rs. 9,69,860, is time-barred as per the limitation prescribed by the Apex Court in Collector of Central Excise, Jaipur v. Raghuvar (India) Ltd. The appellant also relied on the Tribunal's decision in KEC International Ltd. v. C.C.E., Jaipur. However, the Departmental Representative contended that the stay application should be dismissed based on the Apex Court decisions in C.C.E., Pune v. SKF India Ltd. and C.C.E. v. International Auto Ltd.

Issue 2:
The judgment clarified that Section 11A of the Central Excise Act, 1944, governs the levy of duty and provides a limitation of one year, extendable to five years in cases of fraud or suppression. While there is no time limit specified for the recovery of interest under Section 11A, Section 11AB deals with interest realization without any prescribed limitation. The appellant's argument that interest recovery is time-barred was deemed inconceivable as interest follows duty payment automatically, and Section 11AB is not subject to the limitation of Section 11A.

Issue 3:
The Tribunal emphasized that the decision in the case of Reghuvar (India) Ltd. did not consider the absence of a limitation under Section 11AB for interest recovery. Additionally, the Tribunal clarified that the limitation issue is a mixed question of law and facts, and in the present case, the appellant willfully defaulted on interest payments, as evident from the show cause notice issued. The Tribunal dismissed the appeal, stating that the facts were clear, and there was no need for remand, thereby denying the appellant's request for interim relief.

In conclusion, the Tribunal dismissed the appeal, ruling that the interest on supplementary invoices was not time-barred, and the appellant was legally bound to pay the interest as it followed duty payment automatically. The decision highlighted the distinction between duty levy under Section 11A and interest recovery under Section 11AB, emphasizing that interest realization is not subject to the limitation period specified for duty levy.