2024 (9) TMI 1409 - AT - Central Excise

Interest demand on differential duty time-barred without fraud evidence, show cause notice issued beyond limitation period

M/s. Skipper Ltd, (Unit-I) Versus Commr. of CGST & Central Excise, Haldia

CESTAT Kolkata held that the demand for interest on differential duty was time-barred as the show cause notice was issued beyond the normal limitation ... Interest on differential duty on the escalated value - suppression, mis-statement and willful default payment of appropriate leviable duty in the matter by choosing not to opt for provisional assessment in terms of Rule 7 of the Central Excise Rules, 2002 - extended period of limitation - HELD THAT:- It is evident that the Show Cause Notice for interest on differential duty on the escalated value was raised on 09/09/2013 i.e. well beyond normal period of limitation of one year from (31 March 2012) the date of payment of differential duty under the last of the aforesaid invoices. It is also noted that the contention of the department with regard to mis-declaration, suppression etc. is clearly not attracted in the present matter as complete facts of the case and the scheme of assesse’s transactions, work methodology and clearance of finished goods was well within the knowledge of the Department. Any fraud or collusion or suppression for that matter cannot be read under the aforesaid scheme of operation to suggest any intention to evade payment of duty, more so since it has been a regular practice of the assessee’s working. For a SCN invoking the larger period of time in terms of the provisions of Section 11A(1) ingredients thereto like fraud, collusion, willful misstatement, suppression of fact etc. are required to be evidently established. However, it is found that no such ingredient actually exists in the matter and merely holding non-availment of provisional assessment procedure as a valid ground to invoke longer limitation to understating belies reasonability and logic. For a show cause notice invoking normal period of limitation, it is required to be served on the noticee within one year of the relevant date and the period of one year would be required to be counted from the date of the return for the month concerned with short payment of duty. In the present case the notice is issued on 19.09.2013, which is well beyond normal period of limitation - the extended period of limitation is not invokable in the facts and circumstances of the case. The demand for payment of interest being beyond normal period of limitation is therefore unsustainable and liable to be set aside. Whether the appellant is liable to pay the interest on supplementary invoices by invoking extended period of limitation or not? - HELD THAT:- The said issue has been dealt by this Tribunal in the case of COLLECTOR OF CUSTOMS, MADRAS VERSUS TVS. WHIRLPOOL LTD. [1996 (4) TMI 232 - CEGAT, MADRAS] and as maintained by the Hon’ble Apex Court in CCE VERSUS TVS WHIRLPOOL LTD. [1999 (10) TMI 701 - SC ORDER] wherein it has been held by the Apex Court that “it is only a reasonable time that the period of limitation that applies to a claim for the principal amount should also apply to the claim for interest thereon.” Thus, the extended period of limitation is not invokable for the facts and circumstances of the case as the appellant has paid the duty on the supplementary invoices for the material period prior to issuance of Show Cause Notice and the same appropriated vide the impugned order. In that circumstances, the extended period of limitation for demand of interest, is not invokable. Consequently, the demand of interest on supplementary invoices is barred by limitation. The impugned order qua demanding interest on the duty paid on supplementary invoices is set aside. Under the circumstances, no penalty is imposable on the appellant and the same is also set aside. Appeal disposed off. Issues:- Appeal against Order-In-Original confirming duty paid on supplementary invoices, interest demand under Section 11B and Section 11AA of Central Excise Act, and penalty under Section 11AC of the Act.- Allegation of willful violation of Central Excise Rules by not opting for provisional assessment.- Invoking extended period of limitation for demand of interest on differential duty.- Applicability of interest on supplementary invoices within the normal period of limitation.- Dispute over imposition of penalty and interest.Analysis:The appellant, M/s. Skipper Ltd., challenged an Order-In-Original confirming duty paid on supplementary invoices, interest demand, and penalty imposed by the Commissioner. The case involved contracts with price variation clauses for transmission line towers, leading to price escalation or reduction. The appellant paid the differential duty voluntarily but disputed the interest demand. The Show Cause Notice invoked extended limitation alleging willful violation of rules to evade duty. However, the Tribunal found no suppression or intention to evade payment, as the Department was aware of the transactions. The demand for interest beyond the normal limitation period was deemed unsustainable.The Tribunal referenced legal precedents to establish that interest on supplementary invoices should be demanded within a reasonable time, aligning with the period for the principal amount. The judgment highlighted that the extended period of limitation was not applicable due to the appellant's proactive duty payment and the Department's awareness. The Tribunal rejected the Department's reliance on a Supreme Court ruling, emphasizing the necessity of issuing notices within the normal limitation period for sustainable claims. The optional nature of provisional assessment under Rule 7 of the Central Excise Rules was underscored, absolving the appellant from harsher norms for not opting for it.Conclusively, the Tribunal set aside the demand for interest on the duty paid on supplementary invoices, leading to the dismissal of the penalty imposition. The judgment was pronounced on September 24, 2024, in favor of the appellant, M/s. Skipper Ltd., against the Department's contentions.