Tribunal sets aside interest & penalty order due to limitation period, aligns with principal amount.

The Tribunal allowed the appeal, setting aside the order of the Ld. Commissioner (Appeals) regarding the demand for interest and penalty due to exceeding the limitation period for interest demand. The Tribunal emphasized aligning the period of limitation for interest demand with the principal amount's limitation period, following legal precedents. As the interest demand was made beyond one year without invoking the extended period, it was deemed unsustainable. Consequently, the appellant's appeal was allowed, and relief was granted by the Tribunal.

---

---

Issues:
Appeal against impugned order for differential duty payment, interest demand, and penalty imposition.

Analysis:
The appellant, a manufacturer of P&P Medicaments, voluntarily paid differential duty of Rs. 40,54,450/- based on actual cost of production higher than initially calculated duty liability. The Department demanded interest of Rs. 5,20,411/- and proposed penalty under Rule 25 of Central Excise Rules. The Ld. Commissioner (Appeals) upheld the demand but set aside the penalty. The appellant contended that the demand was time-barred as no extended period was invoked in the show cause notice. Citing case laws, the appellant argued for limitation on interest demand.

The Tribunal found the show cause notice for interest issued beyond the limitation period without invoking the extended period. Referring to legal precedents, it held that the period of limitation for interest demand should align with the principal amount's limitation period. As the demand for interest was made beyond one year, it was deemed unsustainable. The Tribunal followed Supreme Court and High Court judgments emphasizing the limitation principle for interest demands. Consequently, the demand for interest and penalty were set aside due to exceeding the limitation period.

The Tribunal concluded that since the demand was not sustainable based on limitation grounds, it did not delve into the case's merits. Therefore, the order of the Ld. Commissioner (Appeals) was set aside, and the appeal by the appellant was allowed. The Tribunal pronounced the operative part of the order in open court, granting relief to the appellant.

---