2013 (7) TMI 304 - AT - Central Excise

Separate Show-Cause Notice for demand of Interest u/s 11AB - For the period 2007 08, Appellant paid the differential duty amounting to Rs.9,17,914/-. This amount was paid on 2.1.2009. However, they did not pay any interest on this amount as required under Section 11AB of the Central Excise Act Held that - When the amount was paid, the interest also should have been paid and there was no need for issue of any separate show-cause notice relying upon the decision in the case of CCE Vs. International Auto Ltd 2010 (1) TMI 151 - SUPREME COURT OF INDIA Limitation - The Department issued a show-cause notice without any inordinate delay that is within about six months Held that - Assessee should pay such interest even without a notice being served on them Decided against the Assessee.

Summary

Issues:
Short-payment of excise duty, demand for interest under Section 11AB, time-barred demand for interest, suppression of value, payment of interest without separate show-cause notice, reasonable time period for recovery of interest.

Analysis:
The case involves the appellants, manufacturers of excisable goods, who sold or transferred goods to their subsidiary company at an incorrect value for excise duty payment. Upon audit, a differential duty of Rs.9,17,914/- was identified and paid by the appellants on 2.1.2009. However, no interest under Section 11AB of the Central Excise Act, 1944 was paid on this amount. Subsequently, the Revenue issued a show-cause notice on 17.7.2009, demanding interest of Rs.1,36,044/- under Section 11AB for the unpaid interest.

The consultant for the appellant argued that the demand for interest made in July 2009 is partly time-barred as the short-payment occurred during 2007-08. Citing the decision in CCE Vs. TVS Whirlpool Ltd., it was contended that the limitation period for the principal amount should also apply to the interest claim, and since no suppression was invoked in the notice, relief should be granted for the time-barred portion of the demand.

On the other hand, the Revenue contended that the short-payment was due to suppression of value, and when the duty was voluntarily paid, interest should also have been paid without the need for a separate notice. Referring to decisions like CCE Vs. SKF Ltd and CCE Vs. International Auto Ltd, the Revenue argued that the Tribunal has consistently held that a reasonable time period, such as six months after payment of duty, is acceptable for seeking interest recovery. Various precedents were cited to support this argument.

The Tribunal examined the legal position post-amendments to the Central Excise Act by Acts 14 of 2001 and 32 of 2003. Referring to the decision in the case of International Auto Ltd, the Tribunal concluded that the assessee should pay interest even without a separate notice. Considering the precedents and legal developments, the Tribunal found no merit in the appeal filed by the assessee and consequently rejected the appeal.