2017 (8) TMI 1035 - AT - Central Excise

Applicability of period of limitation - claim of interest - whether period of limitation is applicable to claim of interest? - Held that - law of limitation has not been incorporated in the statute book casually. That has been enacted with an object of bringing an end to the litigation. Without limitation prescribed by the statute, the litigation shall be unending. Therefore, that should be interpreted in a sense to bring an end to the litigation - judgment rendered by three Judge Bench of the Hon ble Apex Court in the case of CCE Versus TVS Whirlpool Ltd. 1999 (10) TMI 701 - SUPREME COURT OF INDIA , where it was held that The period of limitation that applies to a claim for the principal amount should also apply to the claim for interest thereon, prevails as a rule of precedence for which appeal is allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of limitation period to the claim of interest by Revenue.
2. Whether interest liability arises automatically in cases of duty demand.
3. Precedence of judgments on the claim for interest.

Analysis:
1. The appellant argued that the period of limitation applicable to the principal demand of duty should also apply to the claim of interest by Revenue. The appellant cited the case of Commissioner v. T.V.S. Whirpool Ltd. where the Apex Court held that the limitation applicable to the principal amount should also apply to the claim for interest. The Tribunal agreed with the appellant's argument, emphasizing that the law of limitation aims to bring an end to litigation and should be interpreted to achieve that purpose.

2. On the other hand, Revenue contended that interest liability is a consequence of duty demand and flows automatically, without the need for a separate show cause notice. Even if the appellant pays duty voluntarily, they would still be liable to pay interest. Revenue argued that exemption from interest would result in a loss to the exchequer. However, the Tribunal did not agree with Revenue's argument and upheld the appellant's position regarding the application of limitation to the claim of interest.

3. During the proceedings, it was brought to the attention of the Tribunal that there was a conflicting decision from a two-Judge Bench of the Apex Court in the case of Commissioner of Trade Tax, Lucknow v. Kanhai Ram Thekedar. However, the Tribunal clarified that the rule of precedence dictates that a decision rendered by a higher majority of judges prevails over a decision by a lower majority. Therefore, the judgment by a three-Judge Bench of the Apex Court in Commissioner v. T.V.S. Whirpool Ltd. holds precedence, and the appeal was allowed accordingly, with any consequential relief to be granted in accordance with the law.