2018 (1) TMI 1559 - AT - Central Excise

Demand of interest on differential duty - differential duty paid on the supplementary invoices issued - price escalation received from the customers - period April, 2006 to March, 2008 - HELD THAT - From the perusal of the SCN, it is found that no calculation of interest has been made by Revenue, nor such calculation giving the period for which interest is demanded, had been annexed to the show cause notice. We further notice that in Para 9(b) of the show cause notice it is mentioned that the show cause notice is based on the data submitted by the assessee vide letter(s) dated 16-4-2008 and 24-11-2008 furnishing details of differential duty paid on supplementary invoices issued by them and interest payable thereon. However, such data has not been made part of the show cause notice by annexing the same. The SCN is vague as it does not disclose the basis or period of default for calculation of interest being demanded from the appellant - it is an admitted fact that the appellant had paid the duty on their own, on clearance by them on the main invoice as well as the differential duty on the supplementary invoices and there is no allegation that by virtue of differential duty on the subsequent supplementary invoices there was delay in payment of duty. Thus the show cause notice is deficient and held not maintainable. Appeal allowed - decided in favor of appellant.

Summary

Issues: Lack of interest calculation in show cause notice, Vagueness in show cause notice, Deficiency in show cause notice, Maintainability of show cause notice

In this judgment by the Appellate Tribunal CESTAT MUMBAI, the issue at hand revolves around a show cause notice dated 23-12-2008, where the appellant had raised supplementary invoices for price escalation received from customers, paying the differential duty but omitting to pay interest on it. The Tribunal noted that the notice lacked a calculation of interest and failed to specify the basis or period for demanding interest from the appellant. The show cause notice was deemed vague and deficient as it did not disclose the essential details necessary for the appellant to understand the allegations against them.

The Tribunal further observed that the appellant had voluntarily paid the duty on the main invoice as well as the differential duty on the supplementary invoices without any delay in payment. There was no indication that the appellant's actions had caused any delay in duty payment. Consequently, the Tribunal held that the show cause notice was deficient and not maintainable due to its lack of clarity and failure to establish a valid basis for demanding interest from the appellant.

Therefore, in light of the inadequacies in the show cause notice and the absence of any delay in duty payment by the appellant, the Tribunal allowed the appeal and set aside the impugned order. The judgment underscores the importance of providing clear and specific details in show cause notices to ensure fairness and transparency in legal proceedings.