2014 (2) TMI 281 - HC - Central Excise

Nature of amount paid during pendency of investigation - whether voluntarily payment towards the duty - Held that - when the entire demand in the show cause notice was declared to be barred by limitation, the adjudicating authority erred in concluding that the amount already paid was validly paid and was justified on merits. The reasoning is self contradictory. The amount paid was part of duty, demanded in the show cause notice, which was clearly held to be beyond time. Once the demand was held unsustainable, no amount of duty could have been treated as leviable - Decided against Revenue.

Summary

Issues:
Challenge to order under Section 35G of Central Excise Act, 1944 based on voluntary deposit during investigation and time-barred show cause notice.

Analysis:
1. The Department filed an appeal challenging a Customs, Excise and Service Tax Appellate Tribunal order. The question raised was whether the deposit made during investigation, for a time-barred show cause notice, can be considered voluntary towards duty.

2. The respondent, an Export Oriented Unit, faced objections for not paying central excise duty on sales in the Domestic Tariff Area. Initially, a demand of Rs. 6,52,258 was raised, and the respondent paid Rs. 5,03,673 in response. Subsequently, a show cause notice was issued for a revised amount of Rs. 14,59,379.

3. The respondent paid a total of Rs. 10,34,098 in installments. The Order-in-Original held the payments valid but found the later demands time-barred. The Tribunal focused on the validity of the payments made during the investigation.

4. The Tribunal quoted the adjudicating authority's findings, emphasizing that the demands beyond the time limit were unjustified. It concluded that any deposit made during investigation for time-barred demands cannot be considered voluntary towards duty.

5. The Tribunal's conclusion was supported, stating that once the demand was held time-barred, no amount could be considered leviable. The appeal lacked merit as no substantial legal question was raised.

6. The appeal was dismissed, affirming that payments for time-barred demands cannot be deemed voluntary towards duty, especially when the entire demand was declared beyond the limitation period. The adjudicating authority's decision on the limitation issue was final, rendering the payments invalid.