2017 (6) TMI 933 - AT - Central Excise

Liability of interest - time limitation - suo moto payment of differential duty on revised value - Held that - It has been held by the Hon ble High Court of Delhi in the case of Kwality Ice Cream Company Vs. UOI 2012 (1) TMI 88 - Delhi High Court that the period of limitation that applies to a claim for the principal amount should also apply to the claim of interest thereon - In these cases too, the extended period has not been invoked and the both demands are beyond the period of limitation. Hence, the impugned demands do not appear to be sustainable - Penalties proposed are not sustainable in absence of demands - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Time-barred demands for interest on differential duty paid voluntarily by the appellant.
2. Invocation of extended period for show cause notices.
3. Sustainability of penalties proposed in absence of demands.

Analysis:

Issue 1: Time-barred demands for interest on differential duty
The appellant, a manufacturer of P&P Medicaments, voluntarily paid differential duty after calculating the value based on actual cost of production. The Department later demanded interest on the appellant for delayed payment of duty. The appellant contended that the demands were time-barred as no extended period was invoked in the show cause notices. The Tribunal held that both show cause notices were issued beyond the period of limitation without invoking the extended period. Citing relevant case laws, the Tribunal emphasized that the period of limitation for interest claims should align with that of the principal amount. The Tribunal concluded that the demands were not sustainable due to being beyond the limitation period.

Issue 2: Invocation of extended period for show cause notices
The Tribunal noted that the Department issued show cause notices for interest on differential duty paid voluntarily by the appellant without invoking the extended period. Relying on legal precedents, the Tribunal emphasized that in the absence of invoking the extended period, demands made beyond the limitation period were not tenable. The Tribunal highlighted the importance of adhering to statutory provisions regarding the timeline for issuing demands and invoking the extended period for show cause notices.

Issue 3: Sustainability of penalties proposed
The appellant argued that penalties proposed were not sustainable due to the time-barred demands. The Tribunal concurred, stating that penalties could not stand in the absence of valid demands. By referencing a previous decision in the appellant's own case with identical facts, the Tribunal concluded that the penalties proposed were not justified. Consequently, the Tribunal set aside the order of the Ld. Commissioner (Appeals) and allowed both appeals filed by the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the importance of adhering to statutory timelines for issuing demands and invoking the extended period for show cause notices. The decision highlighted the need for demands to be within the limitation period and penalties to be supported by valid demands.