2018 (9) TMI 1491 - AT - Central Excise

Demand of Interest - demand raised by invoking extended period of limitation - manufacture of job work activities to various clients - Held that - It is a fact on record that during the course of investigation when it was pointed out that the appellant paid duty - In the light of the decision of the Hon ble Punjab & Haryana High Court in the case of VAE VKN Industries Pvt. Ltd. 2013 (10) TMI 30 - PUNJAB & HARYANA HIGH COURT the show cause notice issued to demand of interest from the appellant is barred by limitation - demand of interest set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against demand of interest in relation to job work activities.

Analysis:
The appellant, engaged in job work activities, contested the demand of interest raised by the revenue, claiming it was not sustainable due to the extended period of limitation. The appellant had paid duty immediately upon investigation, and it was argued that maintaining sufficient balance in the Cenvat credit account during the intervening period exempted them from paying interest. The appellant relied on decisions from the Hon'ble Punjab & Haryana High Court and the Hon'ble Karnataka High Court to support their case.

The Revenue, however, supported the impugned order and referred to a decision by the Tribunal in a similar case. After hearing both parties, the Tribunal considered that the demand of interest was indeed raised using the extended period of limitation. Noting that the appellant had paid duty promptly upon discovery during the investigation, the Tribunal found the demand of interest to be time-barred as per the decision of the Hon'ble Punjab & Haryana High Court. Consequently, the Tribunal set aside the confirmed demand of interest against the appellant, ultimately allowing the appeal in favor of the appellant.

This judgment highlights the significance of the period of limitation in demanding interest, especially in cases where duty has been paid promptly upon discovery. It underscores the importance of legal precedents in determining the validity of such demands, as evidenced by the reliance on decisions from higher courts to support the arguments presented by both parties. The ruling serves as a reminder of the procedural requirements and limitations that govern the imposition of interest in tax matters, providing clarity on the application of such rules in job work-related activities.