2011 (6) TMI 437 - AT - Central Excise

CESTAT rules interest demand time-barred, emphasizes adherence to timelines

The Appellate Tribunal CESTAT, DELHI allowed the appeal on merits but held that the demand for interest on supplementary invoices was time-barred, citing ... Interest liability on price increase through supplementary invoices - Held that:- Issue of the interest liability on price increase through supplementary invoices stands settled in favour of the Revenue by Supreme Court in the case of SKF India Ltd (2009 (7) TMI 6 (SC)). However since the demand of interest for the period 1.1.2003 to 31.3.2004, has been raised by SCN dated 30.8.07 and therefore the demand is clearly time barred - Decided against the Revenue. Issues:Appeal against setting aside interest demand on differential amount due to rate variation clause in contract.Analysis:The appeal before the Appellate Tribunal CESTAT, DELHI involved a dispute regarding the demand of interest on a differential amount collected through supplementary invoices due to a rate variation clause in the contract. The department appealed against the order of the Commissioner (Appeals) which set aside the interest demand. The department contended that interest was payable based on a decision of the Hon'ble Supreme Court in the case of CCE, Pune vs. SKF India Ltd. The appeal was solely focused on the issue of interest on supplementary invoices. The respondent argued that the demand was time-barred as the supplementary invoices were issued between 1.1.2003 to 31.3.2004, and the demand for interest was made much later through a show cause notice dated 30.8.07.Upon careful consideration of the submissions and records, the Tribunal acknowledged that the issue of interest liability on price increase through supplementary invoices had been settled in favor of the Revenue by the Supreme Court's decision in the case of SKF India Ltd. However, the Tribunal noted that the demand for interest covering the period from 1.1.2003 to 31.3.2004 was time-barred since the show cause notice was issued on 30.8.07, exceeding the statutory time limit. The Tribunal differentiated the present case from the decision in Abhinav Industries vs. CCE, Jaipur, emphasizing that the facts of that case were not applicable to the current scenario.Consequently, the Tribunal allowed the appeal on merits but held that the demand for interest was hit by limitation. The judgment was pronounced in open court, resolving the issue of interest demand on supplementary invoices in light of the statutory time limit.