2017 (5) TMI 746

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.... as such to their sister concern during the period 1^st July 2000 to 6th November 2001 and reversed the appropriate cenvat credit availed on such inputs. It was the department's contention that the appellant should have cleared the inputs on payment of duty by arriving the assessable value as per the provisions of Section 4 or Section 4A of the Central Excise Act, 1944 and treated such inputs as if manufactured by them. On being pointed out, the appellant paid the differential duty on 9.3.2002. Revenue authorities issued a show cause notice dated 30.6.2005 for demanding interest on the differential duty paid and also seeking to impose equivalent amount of penalty. Adjudicating authority, after following due process of law, demanded an inter....

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....iod and paid the differential duty, hence interest is payable by the appellant. It is his submission that there is no time limit fixed for by the legislation for demand of interest and the judgment of the Hon'ble High Court of Bombay in the case of CCE, Aurangabad vs. Padmashri VV Patil SSK Ltd. - 2007 (215) ELT 23 (Bom.), has held that interest is a civil liability of the assessee who has retained the amount of public exchequer with himself. It is his further submission that once the demand for tax has been upheld, demand for interest thereon is automatic and consequent liability is the ratio laid down by the Tribunal in the case of Balaji Society vs. CCE, Pune-III - 2015 (38) STR 139. It is his further submission that manufacturer is liab....

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....y of the inputs. This position cannot be called in for any deliberations. 8. Since during the relevant time the appellant had paid differential duty on being convinced by the Revenue, he definitely can take a plea for non-discharge of interest and non-imposition of penalty before the judicial forum. It is the settled law that in the first place if the duty liability does not arise, the question of payment of interest and imposition of penalty will not arise. As no duty is payable, interest liability will not arise nor the penalty is required to be imposed. 9. We also find strong force in the contention raised by the learned counsel that since the goods/inputs were cleared to their sister concern, the revenue neutrality issue arises wh....