2016 (11) TMI 514 - AT - Central Excise

Demand of interest - the date specified in the supplementary invoices on 11.2.2011 for the period from September 2004 to December 2006 - time bar - Held that - the show-cause notice is held to be time barred, if issued beyond the period of one year - show-cause notice was issued after the expiry of 4 years 4 months, the entire demand of interest is beyond the period of limitation - reliance placed on the decision of the case of PARAMOUNT RUBBER INDUSTRIES Versus COMMISSIONER OF C. EX., DELHI-IV, FARIDABAD 2011 (4) TMI 1083 - CESTAT, NEW DELHI where it was held that the demand for interest on differential duty paid consequence to the issue of supplementary invoices is subjected to the bar of limitation. Impugned order set aside - appeal allowed.

Summary

Issues:
1. Time limit for issuing show-cause notice for recovery of interest under Section 11A.
2. Liability for payment of interest on differential duty paid through supplementary invoices.
3. Application of time-bar limitation to the recovery of interest.

Analysis:
1. Time Limit for Show-Cause Notice:
The appellant contended that the show-cause notice issued beyond the limitation period is barred under Section 11A. Citing Paramount Rubber Industries vs. CCE, Delhi, it was argued that the demand for interest on differential duty paid through supplementary invoices is subject to the limitation period. The appellant relied on case laws like M/s. UCAL Fuel Systems Ltd. and CC vs. T.V.S. Whirlpool Ltd. to support the argument. However, the department argued that there is no specified time limit under Section 11A for interest recovery, and cited the Sharavathy Conductors Pvt. Ltd. case where the Division Bench observed the automatic nature of interest recovery without a time limit.

2. Liability for Interest Payment:
The issue of interest payment on differential duty was extensively discussed. Referring to the case of CCE vs. SKF India ltd., it was established that the recovery of differential price through supplementary invoices implies short payment of duty, leading to interest levy under Section 11AB. The legal position, as reiterated in the case of CCE vs. International Auto Ltd., confirmed the liability for interest payment from the original clearance date till the payment of differential duty on supplementary invoices. The pending issue of interest chargeability, as referred in the case of Steel Authority of India Ltd. vs. CCE, Raipur, indicated that interest is due from the original clearance date till the payment of differential duty.

3. Application of Time-Bar Limitation:
The argument regarding the time-bar limitation for issuing the show-cause notice was crucial. The appellant claimed that the notice issued after 4 years and 4 months was beyond the one-year limitation period, following the precedent set by the Division Bench. Citing Commissioner vs. T.V.S. Whirlpool Ltd., the appellant emphasized that the period of limitation for the principal amount should also apply to the interest claim. Ultimately, the Tribunal upheld the appellant's argument, deeming the demand for interest beyond the limitation period and setting aside the impugned order in favor of the appellant.

In conclusion, the judgment addressed the time limit for issuing show-cause notices, the liability for interest payment on differential duty, and the application of time-bar limitations to interest recovery, providing a comprehensive analysis of each issue in light of relevant legal precedents and arguments presented by the parties involved.