2010 (1) TMI 1047 - AT - Central Excise

Time limitation - liability of interest - Price escalation clause - whether time limitation would apply to liability of interest also? - Held that - limitation period as prescribed u/s 11A for recovery of non-levied or short levied duty would also apply for recovery of interest on such duty under the provisions of Section 11AB - Since in this case admittedly interest demand pertains to the period from 16-9-2003 to 13-8-2004 and the SCN has been issued on 31-3-2006 and there is no allegation of mis-statement or suppression of facts etc. the SCN dated 31-3-2006 is time barred - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether interest on differential duty paid under supplementary invoices is chargeable as per Section 11AB?
2. Whether the limitation period prescribed under Section 11A applies for the recovery of interest on such duty under Section 11AB?

Analysis:

Issue 1:
The appeal involved the question of whether interest on the duty paid under supplementary invoices is chargeable as per Section 11AB. The appellant contended that interest should be charged based on the judgment of the Hon'ble Supreme Court in the case of CCE, Pune v. SKF India Ltd. The appellant highlighted that the Supreme Court held interest to be chargeable as per Section 11AB without any limitation period or the need for a show cause notice, relying on the judgment of the Hon'ble Bombay High Court in the case of CCE, Aurangabad v. Padmashri V.V. Patil S.S.K. Ltd. The appellant argued that the penalty was set aside by the Supreme Court in the SKF India Ltd. case, emphasizing that it was a case of short payment of duty without deceit. The appellant urged setting aside the impugned order based on these arguments.

Issue 2:
The second issue revolved around whether the limitation period prescribed under Section 11A applies for the recovery of interest on such duty under Section 11AB. The respondent, represented by an advocate, acknowledged the Supreme Court's judgment in the SKF India Ltd. case, agreeing that interest on duty paid under supplementary invoices is chargeable under Section 11AB subject to the limitation period under Section 11A. The respondent cited a Tribunal case involving the Customs Act to argue that the limitation period for recovery of duty should also apply to interest under Section 11AB. The respondent contended that since the duty was paid between specific dates and the show cause notice for interest recovery was issued later without allegations of misstatement or suppression, the notice was time-barred. The Tribunal found merit in the respondent's argument on the issue of limitation, citing precedents and upheld that the limitation period under Section 11A applies to the recovery of interest under Section 11AB. Consequently, the Tribunal dismissed the Revenue's appeal based on the time-barred show cause notice.

In conclusion, the judgment clarified the applicability of Section 11AB for charging interest on duty paid under supplementary invoices and established that the limitation period under Section 11A also governs the recovery of interest under Section 11AB. The decision was based on legal precedents and upheld the respondent's plea on the issue of limitation, ultimately dismissing the Revenue's appeal.