2017 (8) TMI 1097 - AT - Central Excise

Issuance of SCN beyound time limitaion - recovery of Interest and penalty - sou moto payment of differential duty on revised value - Held that - the Department has issued two SCN dt. 22.04.2010 and 20.09.2010 for interest on the differential duty voluntarily paid by the appellant on their own. Both the SCN have been issued beyond the period of limitation. However the extended period has not been invoked in these show cause notices nor is there any allegation in that regard - the issue is squarely covered by the decision in the case of Commissioner Central Excise Commissionerate Versus M/s VAE VKN Industries Pvt. Ltd. 2013 (10) TMI 30 - PUNJAB & HARYANA HIGH COURT where it was held that department had absolutely no jurisdiction to issue SCN after expiry of the period of limitation for interest on the delayed payment for the period - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Barred by time - Demand of interest on differential duty
2. Invocation of extended period in show cause notices
3. Revenue neutrality due to goods transfer to sister unit
4. Applicability of interest on delayed payment of duty
5. Jurisdiction to issue show cause notice for interest
6. Setting aside the demand of interest and penalty

Analysis:
1. The appellant appealed against the impugned order concerning the calculation of assessable value for bulk drugs transferred to their formulation plants, resulting in the payment of differential duty. The Department subsequently demanded interest on the appellant, which was contested on the grounds of being time-barred as no extended period was invoked in the show cause notice. The appellant argued that the demand was revenue neutral as the goods were transferred to their sister unit, which availed Cenvat Credit. The Tribunal found that the show cause notices for interest were issued beyond the limitation period, citing relevant case laws and setting aside the demand of interest and penalty.

2. The Department issued two show cause notices for interest on the differential duty paid by the appellant, but the extended period was not invoked in these notices. The Tribunal referenced previous judgments to emphasize that the period of limitation for the principal amount should also apply to the claim of interest. As the demand for interest was beyond the limitation period and the extended period was not invoked, the Tribunal ruled that the demand of interest confirmed in the impugned order was not sustainable, leading to the setting aside of the order of the Ld. Commissioner (Appeals).

3. The appellant's argument of revenue neutrality due to the goods transfer to their sister unit was considered, along with the contention that the issue was covered by a previous decision of the Tribunal involving the same facts. The Tribunal found that the issue was indeed covered by the Tribunal's previous decision in the appellant's own case, leading to the setting aside of the Ld. Commissioner (Appeals) order and allowing the appeal filed by the appellant. The Tribunal pronounced the operative part of the order in open court, setting aside the demand of interest and penalty imposed on the appellant.