2021 (5) TMI 907 - AT - Central Excise

Interest is demanded on account of delayed payment of duty - supplementary invoice during the period 2009-10 for the period 2008-09 to 2010-11 - Penalty - Time Limitation - HELD THAT - In this case, it is a fact of record that the appellant did not pay interest for the intervening period when they issued supplementary invoices for duty paid thereon. It is also a fact on record that thereafter an audit took place in January-February 2012 for the period 2008-10 and asked the appellant to make the payment of interest for the intervening period, but the appellant did not comply with the said direction. Thereafter, the Revenue was sleeping for more than 3 years and on the morning of 3rd September 2015, a show cause notice was issued to demand interest for the intervening period by invoking extended period of limitation. As it was in the knowledge of the Revenue that the appellant has not paid the interest very well in January-February 2012 despite direction, but no show cause notice was issued to the appellant within one year from the said period. In these circumstances, the show cause notice issued on 03.09.2015 is barred by limitation. The demand of interest is not sustainable - no penalty can be imposed on the appellant - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of interest on delayed payment of duty on supplementary invoice during 2009-10, imposition of penalty, invocation of extended period of limitation.

Analysis:
The appellant contested the demand of interest and penalty imposed due to delayed payment of differential duty on supplementary invoices during 2008-09 to 2010-11. The appellant argued that the demand was time-barred as the show cause notice was issued after an audit in 2012, exceeding the one-year limitation period. The appellant also highlighted conflicting views on the issue, citing a Tribunal decision for support.

The respondent opposed the appellant's contention, emphasizing that as per earlier Supreme Court decisions, interest was due on delayed payments for the intervening period on supplementary invoices. The respondent argued that the self-assessment regime required the appellant to pay interest immediately upon failure to make payment, supporting their stance with a Tribunal decision.

Upon hearing both parties, the Tribunal noted that the appellant did not pay interest for the intervening period despite a 2012 audit directive. The Tribunal found the show cause notice issued in 2015 invoking extended limitation was time-barred, as it was known to Revenue that interest was not paid since 2012. The Tribunal also highlighted conflicting views on the issue, referencing a Supreme Court case that settled the matter in 2019.

Relying on a Tribunal decision, the Tribunal held that the extended period of limitation was not applicable in this case due to conflicting views during the relevant period. Consequently, the demand for interest was deemed unsustainable, leading to the dismissal of the penalty imposition. The impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal's decision favored the appellant by ruling that the demand for interest was time-barred and the penalty was not sustainable, based on the absence of payment for the intervening period and conflicting views on the issue during the relevant period.