2013 (10) TMI 30 - HC - Central Excise

Issuance of Show cause notice beyond normal period of Limitation recovery of interest on late payment of duty - Held that - There was no dispute that assessee had paid the differential duty on supplementary invoices regularly and had shown the same in the ER-I returns, which were filed regularly before the department, therefore, issuance of show cause notice for interest on the delayed payment should also be within a period of one year as stipulated under Section 11-A of the Act - department had absolutely no jurisdiction to issue show cause notice after expiry of the period of limitation for interest on the delayed payment for the period Relying upon Kwality Ice Cream Company and another vs. Union of India and others 2012 (1) TMI 88 - Delhi High Court - Period of limitation, unless otherwise stipulated by the statute, which applies to a claim for the principal amount should also apply to the claim for interest there was no illegality or jurisdictional error in the order passed by Tribunal. - Decided against the revenue.

Summary

Issues:
- Appeal under Section 35-G of the Central Excise Act, 1944 against an order passed by the Customs, Excise and Services Tax Appellate Tribunal.
- Dispute regarding the payment of interest on delayed payment of duty for the period from 2002-03 to 2005-06.
- Interpretation of Section 11-A of the Act concerning the time limitation for issuing show cause notices for interest on delayed duty payments.

Analysis:
1. The appeal was filed challenging an order passed by the Customs, Excise and Services Tax Appellate Tribunal regarding the payment of interest on delayed duty payments. The audit party had observed that the assessee had paid the differential duty but did not pay the interest on supplementary invoices issued during 2002-03 to 2005-06. A show cause notice was issued for the payment of interest based on the amounts detailed in the notice.

2. The Tribunal noted that the assessee had regularly paid the differential duty on supplementary invoices and filed ER-I returns showing the same to the department. The show cause notice issued in 2007 for interest on delayed payments was considered time-barred as it exceeded one year from the date of assessment.

3. The appellant's counsel argued that Section 11-A of the Act does not apply if duty is paid belatedly without interest, hence the notice for interest payment cannot be considered time-barred. On the other hand, the respondent's counsel contended that if duty cannot be recovered after one year, issuing a notice for interest recovery beyond the limitation period would be invalid.

4. The Court referred to a Division Bench judgment of the Delhi High Court, which held that the limitation period for the principal amount should also apply to the claim for interest. As the assessee had paid the duty and shown it in returns regularly, the show cause notice for interest should have been issued within the one-year limitation period as per Section 11-A of the Act.

5. The Court found no jurisdictional error in the Tribunal's order and dismissed the appeal, stating that the department had no authority to issue a show cause notice for interest on delayed payment beyond the limitation period specified in the Act. The judgment emphasized the importance of adhering to statutory limitation periods for claims related to duty payments and interest thereon.