By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Section 11A of the Central Excise Act – payment of differential duty at the time of issue of supplementary invoices – SCN issued after one year for demanding ‘interest’ on such differential duties paid by the assessee – Held, such notices are barred by limitation.
Facts:
The assessee, a manufacturer of auto components, sheet metal components and tools entered into long term contracts with automobile companies for sale of finished excisable goods. On price revision, differential excise duty was paid at the time of issue of supplementary invoices. The question is whether the liability to pay interest on differential excise duty already paid at the time of issue of supplementary invoices would continue and can be demanded beyond the normal period of limitation of one year from the date of supplementary invoice u/s. 11A read with section 11AB of the Act?
Held
The High Court observed that the matter was squarely covered by its decision in the case of Jai Bharat Maruti Ltd.’s case [2014] 50 taxmann.com 224. It also observed that the decision of the Delhi High Court in the case of Kwality Ice Cream Company vs. UOI 2012 (281) ELT 507 (Del) and decision of the Supreme Court in the case of Commissioner vs. TVS Whirlpool Ltd. 2000 (119) ELT A 177 (SC) are the leading authorities which answer the question in favour of the assessee. The Supreme Court has held that, the period of limitation that applies to a claim for the principal amount should also apply to the claim for interest thereon. Based on this principle laid down by the Apex Court, the appeal was allowed and notices demanding interest were held without jurisdiction.
