TMI Blog2020 (2) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... rding the payment of tax and the said payment of tax was paid much before the audit was conducted and there is no demand of tax in the present case. Hence, provisions of Section 73(1B) read with Section 87 are not applicable in the present case. Applicability of time limitation for demanding of interest - HELD THAT:- In the present case, the demand is made for the period April 2011 to March 2016 by issue of a letter of demand dated 24/08/2017. The Tribunal has dealt with this issue of limitation in various decisions relied upon by the appellant cited supra and it has been consistently held that to demand interest also period of limitation is applicable - in the Master Circular No. 1053/02/2017-CX dated 10/03/2017, the Board has clarified that in case where duty and interest is demanded, it is quite clear that limitation prescribed in Section 11A applies. Further it may be noted that in cases where duty has been paid belatedly and interest has not been paid, interest needs to be demanded and recovered following the due process of demand and adjudication. In such cases, the period of limitation as prescribed in Section 11A applies for demand of interest. The confirmation of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest only from 2015-16 onwards and any amount due to the department should be demanded by way of issuing show-cause notice and the same should go through the process of adjudication and finally, a speaking order needs to be passed. However, they deposited an amount of ₹ 11,57,257/- (Rupees Eleven Lakh Fifty Seven Thousand Two Hundred and Fifty Seven only) under protest. The Lower Authority, vide the impugned letter rejected the contentions of the appellants and held that non-payment of interest automatically becomes amount due and hence the question of time bar does not arise so also there is no need for issuance of show-cause notice. The amount of ₹ 11,57,257/- (Rupees Eleven Lakh Fifty Seven Thousand Two Hundred and Fifty Seven only) paid by the appellants under protest was forfeited against the interest payable. Further, the appellants were directed to pay the amount within seven days, failing which proceedings under Section 87 of the Finance Act, 1994 would be initiated. Aggrieved by the impugned letter issued by the Lower Authority, appellant filed appeal before the Commissioner who rejected the said appeal. Hence, the present appeal. 3. Heard both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest confirmed in the impugned order is not proper and legal. 4.1. He further submitted that from the grounds stated above, it is clear that for recovery of interest, issue of show-cause notice under Section 73 is compulsory and the impugned order confirming the demand without issue of show-cause notice is not proper and legal. He further submitted that the findings of the Commissioner (Appeals) in the impugned order holding that letter issued by the Lower Authority under Section 87 is correct, is not legally sustainable because perusal of Section 73 (1B) which was added w.e.f. 14/05/2015 covers situations where self-assessed tax is not paid in part or in full, recovery of such tax with interest can be made by invoking provisions of Section 87 of the Finance Act. He further submitted that in the present case there is no dispute on payment of tax and from the facts above, it is clear that the payment of tax was made before the audit was conducted by the Department. He further submitted that in the present case there is no demand of tax and therefore the provisions of Section 73(1B) read with Section 87 cannot be made applicable and further the audit objection of the Department is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation as prescribed under Section 73 would be applicable. He also submitted that in the present case, the demand is made for the period April 2011 to March 2016 and the same would be barred by limitation as no notice has been issued. For this submission, the learned counsel has relied upon the following decisions: a. Canara Bank Vs. Commr. of C. Ex. Cus., LTU,Bangalore - 2016 (45) S.T.R. 214 (Tri.-Bang.) b. Kwality Ice Cream Company Vs. UOI 2012 (27) S.T.R. 8 (Del.) c. Hindustan Insecticides Ltd. Vs. CCE, LTU - 2013 (297) E.L.T. 332 (Del.) d. Oil Natural Gas Corporation Ltd. Vs. Commr. of C. Ex. S.T, Surat - 2015 (38) S.T.R. 867 (Tri.-Ahmd.) e. M/s. Gujarat State Fertilizers and Chemicals Ltd. Vs. Commr. of C. Ex ST, Vadodara-I - 2016-TIOL-2276-CESTAT-AHM. f. Collector of Customs, Madras Vs. T.V.S Whirlpool Ltd. - 1996 (86) E.L.T. 144 (Tribunal) and affirmed in Supreme Court Commissioner Vs. T.V.S Whirlpool Ltd. 2000 (119) E.L.T. A177 (S.C) 4.3. Learned counsel also submitted that in the Master Circular No. 1053/02/2017-CX dated 10/03/2017 it is provided in para 3.8 as under: 3.8 Applicability of limitation in demanding interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. SKH Auto Components Ltd. Vs. CCE, Delhi-IV 2011 (274) E.L.T. 273 (Tri.-Delhi) e. Hindustan Insecticides Ltd. Vs. CCE and ST (LTU) - 2012 (286) E.L.T. 208 (Tri.-Del.) f. C.C. C.E, Visakhapatnam-II Vs. Anam Electrical Manufacturing Co. 2013 (294) E.L.T. 434 (Tri.-Bang.) g. Indian Oil Corporation Ltd. Vs. CCE, Delhi-III 2013 (292) E.L.T. 582 (Tri.-Del.) 5.2. The learned AR further submitted that the Circular F. No. 208/27/2003-CX-6 dated 18.12.2006 cited by the appellant in support of his case has been rescinded by the Master Circular No. 1053/02/2017-CX dated 10/03/2017. Learned AR also submitted that the decisions relied upon by the appellant cited supra are relevant to Central Excise matters or Customs and is not under the Service Tax and hence not applicable in the present case. 6. After considering the submissions of both the parties and perusal of the material on record, I find that in the present case the appellant paid the service tax liability but with delay. Appellants have shown the tax arrears in their returns and subsequently paid the tax due. Subsequently, during the audit, the Department detected that there was a delay and the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anathema to the principle of rule of law. In the Kanhairam Thekedar case decided by the Apex Court, the Apex Court had held that since interest liability accrues automatically, separate written notice is not required for its recovery if it is not included in the assessment order. Therefore, it follows that only in a case where there is an assessment order determining the tax liability, interest would be liable to be recovered since it is consequential to the demand of tax. The said decision nowhere states that in a case where only recovery of interest is involved, no notice is required to be issued. In fact in the said order, it has been categorically held that if the assessment order does not include interest, demand for interest thereafter has to be made within a reasonable period. Therefore, I am unable to agree with the interpretation given by the Hon ble Member (Technical) of the Apex Court s order in the Citadel Fine Pharmaceuticals case. 3.2. It is an implied principle of the rule of law that any order having civil consequences should be passed only after following the principles of natural justice. Otherwise, it will be a violation of Articles 14 and 21 of the Constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017. The Tribunal has dealt with this issue of limitation in various decisions relied upon by the appellant cited supra and it has been consistently held that to demand interest also period of limitation is applicable. In the case of Kwality Ice Cream Company cited supra, the Hon ble Delhi High Court held that period of limitation prescribed for claim of principal amount should also apply to the claim for interest thereon. Further I find that in the Master Circular No. 1053/02/2017-CX dated 10/03/2017, the Board has clarified that in case where duty and interest is demanded, it is quite clear that limitation prescribed in Section 11A applies. Further it may be noted that in cases where duty has been paid belatedly and interest has not been paid, interest needs to be demanded and recovered following the due process of demand and adjudication. In such cases, the period of limitation as prescribed in Section 11A applies for demand of interest. Further the case-laws relied upon by the learned AR are not applicable to the facts of the present case and are distinguishable. 7. In view of my discussion above, I am of the considered view that the confirmation of demand of interest w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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