2010 (1) TMI 358 - AT - Central Excise

Demand- Limitation- There is no dispute about the liability of the appellants to pay the differential duty. The appellants supplied excisable goods on the basis of contract containing price escalation clause. Subsequently, due to revision in prices, the appellants paid the differential duty. Held that-dispute as to whether in determining liability to interest, bar of limitation applicable or not. Issue of bar of limitation not raised before original authority and before Commissioner (Appeals) impugned order holding recovery of interest with reference to date of clearance of goods and due date by which duty ought to be paid, set aside and matter remanded to original authority

Summary

Issues:
- Liability of appellants to pay the differential duty and interest with reference to price escalation clause.
- Applicability of limitation on the demand for interest.
- Whether the bar of limitation applies in determining the liability to interest.

Analysis:
1. Liability of appellants to pay the differential duty and interest: The case involved appeals filed by M/s. Rajasthan Transformer & Switchgears and M/s. Fatehpuria Transformer & Switchgears regarding the payment of differential duty due to price escalation in excisable goods supplied under contract. Both sides agreed on the liability to pay the differential duty, which had already been settled. The dispute centered around the liability for interest, with the original authority and Commissioner (Appeals) upholding the interest payment. The Hon'ble Supreme Court's decision in CCE, Pune v. SKF Ltd. was cited to establish the liability for interest on price increase.

2. Applicability of limitation on the demand for interest: The appellant's representative argued that while the liability to interest was acknowledged, the demand for interest should be subject to limitation. Referring to the decision in Collector of Customs, Madras v. T.V.S. Whirlpool Ltd., it was contended that the demand for interest should be governed by the same limitation as the demand for duty. The Tribunal's decision was cited, which stated that the period of limitation applicable to the principal amount should also apply to the claim for interest. The Department's appeal challenging this decision was dismissed by the Supreme Court.

3. Bar of limitation in determining the liability to interest: The issue of whether the bar of limitation would apply in determining the liability to interest was raised. The appellant sought a remand to present arguments on the limitation issue, while the SDR preferred a final decision by the Tribunal. The Tribunal's decision in the case of KEC International Ltd. was referenced, emphasizing that limitation being a mixed question of law and facts, a remand to the original authority would allow both parties to present their contentions effectively. Consequently, the Tribunal set aside the orders of the Commissioner (Appeals) and the original authority, remanding the matter to the original authority to consider the applicability of the bar of limitation regarding the recovery of interest and to make a decision after granting a reasonable opportunity of hearing to the appellants.