Whether time limit applies for demand of interest?

PJ/Case law/2014-15/2267

Case:- M/s OIL AND NATURAL GAS CORPORATION LTD Vs COMMISSIONER OF CENTRAL EXCISE AND SEVICE TAX, SURAT-II

Citation:- 2014-TIOL-1175-CESTAT-AHM

Brief facts:- The stay application had been filed by the appellant for staying the operation of OIO No.SUR-EXCUS-002-COM-061-13-14, dt. 31.12.2013 passed by Commissioner of Customs, Central Excise and Service Tax, Surat-II.

Appellant’s contentions:- Shri D.K. Trivedi, Advocate appearing on behalf of the appellant argued that there was a delay in payment of periodical duty from the Cenvat Credit which was belatedly paid during the period July 2010 to March 2012. It was his case that there were sufficient balance in the Cenvat account of the applicant, therefore, no interest was demandable in the present proceedings. He further contended that the demand raised by the show cause notice in the present case had been issued after a period of one year and as per Delhi High Court's order in the case of Kwality Ice Cream Company Vs. Union of India [2012 (281) ELT 507 (Del.)] = 2012 TIOL-252-HC-DEL-CX, demand was time barred.

Respondent’s contentions:- Shri K.J. Kinariwala (A.R) appearing on behalf of the revenue argued that for demand of interest no time limit was applicable and accordingly defended the order passed by the adjudicating authority. He also held that the entire demand was not beyond the period of one year as the required returns were required to be filled on half yearly basis.

Reasoning of judgment:- Heard both sides and perused the case records. So far as applicability of limitations of one year was concerned, the Hon’ble judge held that the judgment passed by Delhi High Court would had relevance and it, prima facie, conveyed that the demand of interest had also to be issued within one year. However, it was seen from the Annexure to the show cause notice dt. 18.04.2013 that the demand period was from October 2007 to March 2012 and the periodical duty paying returns in service tax matter were also required to be filed on half yearly basis. In view of the demand previsions the entire period was not beyond one year. Appellant had, therefore, not made out a prima facie case for complete waiver of the confirmed demands as on merits once there was a delay in payment of duties the interest was required to be paid on the period of delay. Appellant was, accordingly, directed to pre deposit an amount of Rs.50,000/- within four weeks and report compliance to the bench by 20.06.2014. Subject to the payment of the above amount, there would be stay on recovery on the remaining amounts till the disposal of this appeal.

Decision:- Pre-deposit ordered.

Comment:- The analogy drawn from the case is that the demand for interest is mandatorily required to be raised in case where duty is paid belatedly despite the fact that there is enough cenvat credit balance. Furthermore, the time limit also applies for raising demand of interest and as in the present case, the entire demand was not beyond the period of limitation, pre-deposit was ordered.

Prepared by:- Ranu Dhoot

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PJ/Case law/2014-15/2267

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