2012 (10) TMI 305 - AT - Central Excise

Demand of credit along with the interest and imposition of penalty Held that - Education Cess was payable @ 2% of Central Excise duty, whereas due to system error in the computer, the same was paid @ 4% resulting in excess payment of Rs. 70,046.00. On detection of the error, the same was rectified by the Appellant suo motu by taking credit of the said amount - show cause notice was issued on 20-12-2007, which is beyond the normal period provided under Section 11A of the Central Excise Act, 1944 and suppression of facts etc. was not alleged against the Appellant - demand raised is hit by limitation of time

Summary

Issues:
Challenge to Order-in-Appeal upholding demand of credit, interest, and penalty - Excess payment of Education Cess due to system error - Time-barred demand - Proper procedure for taking credit of excise duty paid.

Analysis:
The Appellant filed an Appeal against the Order-in-Appeal upholding the demand of credit, interest, and penalty due to excess payment of Education Cess. The Appellant, engaged in manufacturing writing and printing paper, paid Education Cess at 4% instead of the correct 2% due to a system error. Upon self-discovery of the error, the Appellant rectified it by taking credit of the excess amount paid. Subsequently, a show cause notice was issued for recovery, including penalty, which was confirmed by the lower Adjudicating Authority and upheld by the Commissioner (Appeals).

The main contention raised by the Appellant was that the demand was time-barred as the error was rectified promptly, and the show cause notice was issued after a significant delay. The Appellant argued that the question of limitation was not considered by the Commissioner (Appeals) on the grounds that it was not raised before the lower Adjudicating Authority. However, the Appellant contended that the issue of time-bar is a question of law that can be raised at any stage. The Appellant emphasized that since no suppression of facts was alleged and the demand exceeded the normal period under Section 11A of the Central Excise Act, 1944, the demand was hit by the limitation of time.

Upon review, the Tribunal acknowledged that the show cause notice was issued beyond the normal period provided by law, and no allegations of suppression of facts were made against the Appellant. The Tribunal recognized that the issue of time-bar is a question of law that must be considered. Despite the Commissioner (Appeals) not addressing this issue due to it not being raised before the lower Adjudicating Authority, the Tribunal held that the Appellant could raise this point before them. Consequently, the Tribunal set aside the Order-in-Appeal and allowed the Appeal, pronouncing the judgment on 15-11-2011.