Limitation for interest recovery and penalty under central excise fails absent fraud, suppression, or wilful misstatement.

Where the department was already aware of the price revision and supplementary billing, an interest demand on delayed payment of differential duty had to be raised within the normal period; a demand issued beyond that period was time-barred and unsustainable. Penalty under Rule 25 read with Section 11AC could not be imposed because no fraud, suppression of facts, collusion or wilful misstatement was established. Accordingly, both the interest demand and the penalty were set aside.

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Issues: (i) Whether the demand of interest on delayed payment of differential duty was barred by limitation under the proviso to Section 11A of the Central Excise Act, 1944; (ii) Whether penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 was sustainable in the absence of fraud, suppression of facts or wilful misstatement.

Issue (i): Whether the demand of interest on delayed payment of differential duty was barred by limitation under the proviso to Section 11A of the Central Excise Act, 1944.

Analysis: The differential duty had already been paid before issuance of the show cause notice, and the department was aware of the price revision and supplementary billing. In these circumstances, the Tribunal held that the department ought to have proceeded within the normal period. Following the principle that the limitation applicable to the principal duty demand also governs the claim for interest, the Tribunal held that an interest demand raised beyond the normal period was time-barred.

Conclusion: The demand of interest was barred by limitation and was unsustainable.

Issue (ii): Whether penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 was sustainable in the absence of fraud, suppression of facts or wilful misstatement.

Analysis: The authorities had not recorded any specific finding or evidence showing mala fide intent, fraud, collusion, suppression of facts, or wilful misstatement to evade duty. As the statutory conditions for imposing equal penalty were not established, the Tribunal held that the penalty could not be sustained.

Conclusion: The penalty was not sustainable and was liable to be set aside.

Final Conclusion: The appeal succeeded to the extent that both the interest demand and the penalty were set aside.

Ratio Decidendi: Where the department is aware of the relevant facts and no fraud, suppression of facts, collusion or wilful misstatement is established, the normal period of limitation applies to interest recovery as well, and penalty under Section 11AC cannot be imposed.

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