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2018 (4) TMI 659 - AT - Central ExciseDemand of Interest - time limitation - Revenue is essentially in appeal against the order on the ground that the provisions of Section 11AB can be invoked in absence of demand of duty paid under Section 11A(2) or paid under Section 11A(2B) - Held that - no demand of interest can be made beyond the period of limitation when the Revenue has failed to show any ground for invocation of longer period of limitation - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, VADODARA-II Versus M/s GUJARAT NARMADA FERTILIZERS CO LTD 2012 (4) TMI 309 - GUJARAT HIGH COURT , where it was held that when the period of limitation had already expired and when the extended period beyond one year was not available to the department as held by the Commissioner himself in his order in original, to our mind the respondent was not liable to pay even the basic duty - appeal dismissed - decided against Revenue.
Issues:
Appeal filed by Revenue against dropping of proceedings for recovery of interest and imposition of penalties. Analysis: The appeal was filed by the Revenue against the dropping of proceedings initiated against the respondent for recovery of interest and imposition of penalties. The respondent, engaged in the manufacture of petroleum products, was receiving LPG from ONGC's premises without payment of duty under AR3A bond procedure. Investigations led to the respondent paying full duty for the period July 1997 to July 2002. The Commissioner dropped a separate proceeding for disallowing CENVAT credit but issued a show-cause notice for demanding interest and imposing penalties. The Revenue argued that interest was not paid by the respondent for the duty paid, and the Commissioner's order was incorrect as Section 11A(2B) does not require the determination of duty for demanding interest. The Revenue contended that there was a case for determining penalties due to a significant delay in duty payment. On the other hand, the respondent argued that the notice did not determine the duty, so interest under Section 11AB could not be demanded. They claimed that there was no loss to the Department as they were entitled to CENVAT credit and that the law of limitation applied to interest and penalties. Citing relevant case laws, the respondent emphasized that the Revenue did not challenge their bona fides and that they should not be penalized for availing credits lawfully. The Tribunal reviewed the submissions and found that a show-cause notice was issued for demanding interest on LPG captive consumption. It was observed that the Commissioner found no malafide intent in the respondent's actions and appreciated their duty payment beyond the normal limitation period. Relying on a decision by the High Court of Gujarat, the Tribunal held that no interest demand could be made beyond the limitation period without grounds for an extended limitation period. Consequently, the appeal by the Revenue was dismissed, following the precedent set by the High Court of Gujarat in a similar case. In conclusion, the Tribunal's decision was based on the interpretation of relevant legal provisions, the absence of malafide intent by the respondent, and the application of the law of limitation to the demand for interest. The Tribunal's ruling aligned with the precedent set by the High Court of Gujarat in a comparable case, emphasizing the importance of legal provisions and limitations in demanding interest and penalties.
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