2019 (10) TMI 1022 - AT - Central Excise

Demand of interest on delayed payments - applicability of time limitation - HELD THAT - The provisions of limitation are equally applicable to the demand of interest. In the present case, the proceedings stand initiated against the appellant by invoking longer period of limitation. There is neither any allegation nor any evidence of misstatement or suppression etc. with an intent to evade payment of duty. In fact, the differential duty was paid by the appellant suo motu on raising of supplementary invoice. In such a scenario, no mala fide can be attributed to the appellant. In such circumstances, the demand of interest has to be held as barred by limitation but the same is being confirmed to the extent of ₹ 13,88,390/- as the appellant is not contesting the same on account of having deposited the said amount. Accordingly, the confirmation of interest amount to the extent of ₹ 13,88,390/-. Penalty - HELD THAT - There is a finding recorded of absence of any mala fide on the part of the assessee, thus not calling for imposition of any penalty upon them. Accordingly, the same is set aside. Appeal disposed off.

Summary

Issues:
1. Demand of interest on delayed payments
2. Imposition of penalty

Analysis:

Issue 1: Demand of interest on delayed payments
The case involved the appellants, engaged in manufacturing heavy engineering goods, who raised supplementary invoices subsequent to the original clearance of goods and paid the differential duty accordingly. The Revenue contended that interest was also payable on such delayed payments and issued a show cause notice for the period April 2006 to September 2009. A subsequent notice proposed the imposition of a penalty. The adjudicating authority confirmed the demand of interest and imposed a penalty through a single order. The appellants argued that the additional duty payment was due to a hike in the final price of goods and thus, no interest liability should be imposed. The tribunal found that the demand of interest was barred by limitation as there was no evidence of misstatement or suppression to evade duty. The differential duty was paid voluntarily by the appellants, and no mala fide intent was attributed to them. Therefore, the tribunal upheld the confirmation of interest to the extent of the amount already deposited by the appellants.

Issue 2: Imposition of penalty
The appellants had already deposited the amount and were not seeking relief for the interest paid. The only challenge in the appeal was the imposition of a penalty. The Revenue argued that the demand of interest under Section 11AB of the Central Excise Act was appropriate since the differential duty was paid after the clearance of goods. However, the tribunal found no mala fide on the part of the appellants, leading to the setting aside of the penalty imposed on them. The tribunal concluded that since there was no evidence of intent to evade duty and the appellants had paid the differential duty voluntarily, no penalty was warranted.

In summary, the tribunal held that the demand of interest beyond the normal period of limitation was barred and confirmed the interest amount to the extent already deposited by the appellants. The imposition of a penalty was set aside due to the absence of any mala fide intent on the part of the appellants.