2018 (2) TMI 1244 - AT - Central Excise

Demand of interest - extended period of limitation - Held that - the appellant has reversed the Cenvat credit on 2.9.2011 on pointing out by the Audit team. At the time of reversal of Cenvat credit the appellant was not asked to pay interest. Later on the SCN has been issued by invoking the extended period of limitation the same is barred by limitation as held by the Hon ble Punjab & Haryana High Court in the case of Neel Metal Products Ltd. 2014 (11) TMI 497 - PUNJAB AND HARYANA HIGH COURT - the show cause notice is barred by limitation qua demand of interest from the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against confirmed demand of interest invoking extended period of limitation.

Analysis:
The appellant appealed against an order confirming the demand of interest by invoking an extended period of limitation. The case involved the appellant availing inadmissible Cenvat credit during an audit period from Sept. 2006 to October 2011. Upon being notified by the Audit Team on 2.9.2011, the appellant reversed the Cenvat credit. Subsequently, a show cause notice dated 26.2.2013 was issued for the demand of interest for the intervening period. The appellant contended that the show cause notice was time-barred, citing a judgment of the Hon'ble Punjab & Haryana High Court in a similar case.

The appellant argued that the interest demand could not be confirmed due to the limitation bar, as per the precedent set by the Hon'ble Punjab & Haryana High Court in a specific case. On the contrary, the respondent opposed this argument, asserting that interest is a mandatory provision applicable in cases of delayed duty payment or reversal of Cenvat credit. The respondent claimed that since the appellant suppressed the fact of availing inadmissible Cenvat credit, the extended period of limitation was appropriately invoked.

After hearing both parties and considering their submissions, it was observed that the appellant had reversed the Cenvat credit without being asked to pay interest at that time. The show cause notice issued later invoking the extended period of limitation was deemed time-barred based on the judgment of the Hon'ble Punjab & Haryana High Court. The judgment cited various cases where it was established that the period of limitation for interest on delayed payments should align with the limitation for the principal amount, unless specified otherwise by the statute.

Consequently, the appellate tribunal held that the show cause notice was indeed barred by limitation concerning the demand of interest from the appellant. As a result, the impugned order was set aside, and the appeal was allowed in favor of the appellant, granting consequential relief. The judgment highlighted the importance of adhering to the specified limitation periods for interest demands, as established by relevant legal precedents and court decisions.