2022 (3) TMI 692 - AT - Central Excise

Payment of differential excise duty upon finalisation of the price between parties - Price Escalation Clause - Adjustment of interest (out of refund arising subsequently) - barred by time limitation or not - HELD THAT - Hon ble Delhi High Court in the case of HINDUSTAN INSECTICIEDES LTD. VERSUS COMMISSIONER CENTRAL EXCISE, LTU 2013 (8) TMI 225 - DELHI HIGH COURT relied upon, wherein the similar issue of payment of differential duty, subsequent to price revision was involved, and whether the interest was payable for the retrospective period from the date of original invoice, under the fact that the appellant have suo moto paid the differential duty upon raising of the supplementary invoice. Extended period of limitation - HELD THAT - The benefit of extended period of limitation is not available to Revenue in the present matters, there being no element of fraud, mis-statement or contumacious conduct on the part of the appellant. Thus, the demand of interest is hit by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Adjustment of interest claimed to be time-barred.

Analysis:
The appeals revolve around the adjustment of interest claimed to be time-barred, specifically related to the payment of differential excise duty and interest under Section 11AB. The appellants, engaged in the manufacture of dutiable goods, faced show cause notices for not paying interest from the date of original invoice till the date of payment of differential duty upon issuing supplementary invoices for price variations. The issue was adjudicated by the Commissioner, who confirmed the demand of interest and imposed a penalty. The appellant challenged this decision before the Tribunal.

The appellant argued that the chargeability of interest for the period from the original invoice to the supplementary invoice had been settled in favor of the Revenue by the Supreme Court in a previous case. However, the appellant contested the levy of interest on grounds of limitation, asserting that the extended period of limitation was not applicable as there was no element of fraud or misstatement on their part. They relied on a Delhi High Court ruling to support their argument that the extended period of limitation could not be invoked without evidence of fraudulent conduct.

On the other hand, the Departmental Representative relied on various rulings to support the imposition of interest. However, the Tribunal, following the precedent set by the Delhi High Court and the Supreme Court, held that the benefit of the extended period of limitation was not available to the Revenue in the absence of fraud or misstatement by the appellant. Consequently, the demand for interest was deemed time-barred, leading to the allowance of the appeals and setting aside of the impugned orders.

In conclusion, the Tribunal's decision was based on the interpretation of the law regarding the imposition of interest for delayed payment of differential duty, emphasizing the requirement of fraudulent conduct for invoking the extended period of limitation. The judgment provides clarity on the issue of time-barred interest adjustments in cases involving retrospective revisions of prices and differential duty payments.