2013 (10) TMI 355 - HC - Central Excise

Limitation Period u/s 11-A - Notice for Interest on Delayed Payment Held that - Following Hindustan Insecticides Ltd. v. Commissioner Central Excise, LTU 2013 (8) TMI 225 - DELHI HIGH COURT As the period of limitation that applies to recovery of the principal amount shall also apply to the claim for interest thereon, the demand is time barred - Issuance of show cause notice for interest on the delayed payment should also be within a period of one year as stipulated under Section 11-A of the Act - Therefore, department has absolutely no jurisdiction to issue show cause notice after expiry of the period of limitation for interest on the delayed payment for the period - period of limitation, unless otherwise stipulated by the statute, which applies to a claim for the principal amount should also apply to the claim for interest thereon Decided in favour of Assessee.

Summary

Issues:
- Challenge to order dated 20.07.2012 by Customs, Excise & Service Tax Appellate Tribunal
- Determination of relevant date of payment of duty
- Liability to pay interest from the date of removal of goods
- Tenability of show cause notice claiming interest for more than one year
- Consideration of provisions of Section 11A and 11AB of the Central Excise Act, 1944
- Impact of Delhi High Court's judgment on the present appeal
- Application of period of limitation to the claim for interest

Challenge to Order by Tribunal:
The High Court admitted an appeal challenging the order passed by the Customs, Excise & Service Tax Appellate Tribunal. The substantial questions of law included determining the relevant date of duty payment, liability for interest from goods removal, and the tenability of a show cause notice claiming interest for over a year. The appellant sought the appeal's allowance based on the Delhi High Court setting aside a similar order against another company. The revenue argued against this, citing the Delhi High Court's alleged oversight of relevant provisions.

Application of Period of Limitation:
Upon hearing both parties and reviewing the impugned order, the High Court aligned with the Delhi High Court's decision, citing precedents like Kwality Ice Cream Company and TVS Whirlpool Limited. It held that the demand for interest was time-barred due to the application of the period of limitation to the claim for interest. The court emphasized that the jurisdiction to issue a show cause notice for interest on delayed payment should be within a year, as stipulated under Section 11-A of the Act.

Judgment and Precedents:
The High Court referenced judgments from the Delhi, Bombay, and Gujarat High Courts to support its decision. It highlighted that unless otherwise stipulated by the statute, the period of limitation for the principal amount should also apply to the claim for interest. The court dismissed the revenue's arguments, stating that no other period of limitation applied and that there was no allegation of fraud or collusion. Consequently, the court ruled in favor of the appellant, setting aside the impugned order and allowing the appeal based on the judgment in Hindustan Insecticides Ltd. v. Commissioner Central Excise, LTU.

This comprehensive analysis of the judgment highlights the issues involved, the arguments presented by both parties, the court's reasoning, and the final decision rendered by the High Court.