Whether interest paid on the differential duty without any show cause notice being issued can be challenged?

PJ/Case Law/2013-14/1861

Case:-DAYA ENGINEERING WORKS (SLEEPER) LTD. VERSUS COMMR. CO C. EX., JAIPUR-II

Citation:-2013(294) E.L.T 99 (Tri.-Del.)

Brief Facts:-The appellants were clearing goods to Railways on provisional basis. Subsequently, on account of escalation clause in the agreement, the value of the goods was enhanced. Accordingly on finalization of assessment, additional duty was paid by the appellant.

There is no dispute to above fact. The appellants were issued notice by their jurisdictional of Central Excise authorities to pay interest on the duty, which stands paid by the appellants by way of issuing supplementary invoices. The appellants accordingly deposited the interest of Rs. 3,23,940/-. The Deputy Commissioner, vide his order confirmed the deposit of said interest by the appellant. The order of the Deputy Commissioner stands appealed against before the Commissioner (Appeals). Hence the present appeal.

Appellant Contentions:- Appellant does not dispute the legal position that the interest is payable by them in view of the law declared by the Hon’ble Supreme Court in the case ofCCE, Pune v. SKF India Ltd. – 2009(239) E.L.T 385 (S.C.). However, he submits that before passing of the order, the Revenue was under legal obligation to issue show cause notice to them. The show cause notice having not been issued to them for confirmation of interest against them was unsustainable. Accordingly, he prays for setting aside the impugned order.

Respondent Contentions:- Countering the arguments, learned SDR appearing for the revenue submits that the notice was issued (though not show cause notice) issued to them for deposit of interest amount, which was duly complied with. It is only as legal requirement that the deposits made by the appellant were subsequently confirmed by the way of passing of order by the Deputy Commissioner. In any case, he submitted that there is no such requirement of issuing any show cause notice for the purpose of confirmation of interest, which is nothing but appendix to the principal amount. She further submits that in any case, there is no time limit for issuing show cause notice for interest and even if objection of the appellant is accepted, the show cause notice for confirmation of interest can still be issued.

Reasoning of Judgment:-After appreciating the submissions both sides, we find that the law on the issue, as to whether the interest is required to be paid on the differential duty paid at the time of clearance of goods on account of supplementary invoices stands settled by the Hon’ble Supreme Court in the case of CCE, Pune v. SKF India Ltd. referred (Supra). It is also seen that the interest amount was deposited by the appellant only after issuance of two notices to them. It is also seen that the appellants have never claimed refund of the said amount on the ground that no show cause notice stands issued to them, the order of the adjudicating authority is only confirmation of above deposit amount of interest. Further, as rightly argued by the learned SDR, no time-limit has been prescribed under the law for issuance of show cause notice for recovery of interest amount. The interest being appendix to the principal amount is required to be paid suo motto by an assessee. As such, Tribunal finds no justification or reason to interfere with the impugned order of the lower authorities.

Decision:- The appeal filed by the appellant is rejected.

Comment:- The significance of this case is that there is no time limit for issue of show cause notice for recovery of interest amount. Issue of show cause notice is only a legal requirement that the deposits made by the appellant are subsequently confirmed by way of passing of order by the Deputy Commissioner. Moreover, the issue whether interest is required to be paid on the differential duty paid at the time of clearance of goods on account of supplementary invoices stands settled by the Hon’ble Supreme Court in the case ofCCE, Pune v. SKF India Ltd.

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PJ/Case Law/2013-14/1861

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