2013 (11) TMI 1416 - AT - Central Excise

Demand of Interest on differential duty - Non observance to the provisions of Rule of central excise rules Held that - Following Hindustan Insecticides Ltd. Vs. CCE&ST(LTU) 2013 (3) TMI 456 - CESTAT NEW DELHI - The interest under Section 11AB on a duty demand confirmed under Section 11A(2) or self-admitted/self-ascertained duty liability under Section 11A(2B) or for delay in payment of duty self-assessed under Rule 6 of Central Excise Rules, 2002 by the due date prescribed under Rule 8 ibid is sum due to the Government, which is recoverable under Section 11 of the Central Excise Act, 1944 and for which there is no limitation period. The show cause notices issued in these cases, even if invoking Section 11A, have to be treated as mere communication to the assessees for recovery of interest under Section 11 - the appellant has not been able to make out a case in favour of the them Decided against Assessee.

Summary

Issues:
1. Differential sale price received by the appellants from the customer.
2. Appellants not following the provisions prescribed under Rule 7 for provisional assessments.
3. Demand for interest on the unpaid differential duty.
4. Appellants' argument regarding the time limit for payment of interest.
5. Appellants' reliance on certain decisions to support their case.
6. The argument regarding the applicability of the time limit under Section 11A for the demand of interest.

Analysis:

1. The appellants, engaged in the manufacture of electrical transmission conductors, received a differential sale price from their customer after clearance of final products due to a price escalation clause in the sale agreement. They were required to pay duty based on the provisional price quoted in the agreement and pay the differential duty upon submitting variations in the cost of raw materials. The audit revealed that the appellants did not follow the prescribed provisions under Rule 7 for provisional assessments, leading to the demand for interest on the unpaid differential duty.

2. The issue raised by the appellants regarding the time limit for payment of interest was based on the argument that the show-cause notice was issued after a significant delay compared to the period covered. They contended that they should only be liable to pay interest for the normal period as per the provisions of Section 11A. However, the Tribunal rejected this argument, stating that no time limit is applicable for the recovery of interest under Section 11 of the Central Excise Act, 1944.

3. The appellants relied on various decisions to support their case, including Paramount Rubber Industries, EMCO Ltd., and others. However, the Tribunal, following the decision in the case of Kanhi Ram Thekedar, emphasized that the interest under Section 11AB is a sum due to the government without any limitation period. The Tribunal concluded that the show-cause notices issued for the recovery of interest should be treated as mere communication to the assessees, dismissing the appellants' appeals.

In conclusion, the Tribunal upheld the demand for interest on the unpaid differential duty, rejecting the appellants' arguments regarding the time limit for payment of interest and the applicability of Section 11A. The decision was based on the understanding that interest under Section 11AB is recoverable without any limitation period, as established in previous legal precedents.