Introduction: The case of NTF (India) Pvt. Ltd. vs. C.C.E at CESTAT Chandigarh revolves around the imposition of Excise Duty on the manufacturing of auto parts. This detailed analysis delves into the background, arguments presented, and the ultimate conclusion reached by the tribunal.
The dispute arises from the revision of prices by NTF (India) Pvt. Ltd., leading to supplementary invoices and payment of differential excise duty. Two show cause notices, dated 26.10.2004 and 09.02.2007, demanded interest covering the period 1999 to 2004 and March 2005 to November 2006, respectively. The adjudicating authority confirmed the interest demand under Section 11AB read with Section 11A of the Central Excise Act, 1944.
The appellant contested the order, alleging a lack of proper appreciation of facts, legal errors, and a violation of natural justice. The key contention revolves around the demand for interest on differential duty. The appellant argued that during the disputed period, there were conflicting views on interest liability for central excise duty on supplementary invoices.
The appellant’s counsel highlighted the Hon’ble Supreme Court’s referral of the issue to a Larger Bench, leading to a final decision in 2019. They asserted that the appellant paid the duty on supplementary invoices promptly and under protest. The extended period of limitation, according to the appellant, was wrongly invoked, considering the prevailing uncertainty during the disputed period.
Citing relevant legal precedents such as Super Threading India Pvt. Ltd. and KEC International Ltd., the appellant contended that the extended period cannot be invoked without evidence of fraud or misstatement intending to evade duty. Reference was also made to the Punjab and Haryana High Court’s decision in Neel Metal Products Ltd., emphasizing that interest cannot be demanded beyond the normal limitation period without fraud or collusion.
The Department’s representative countered, relying on the findings of the impugned order and the settled position by the Hon’ble Supreme Court in the case of Steel Authority of India Ltd. The Commissioner (Appeals)’s reliance on CCE Pune Vs. M/s SKF India Ltd was highlighted.
After thorough consideration of arguments and records, the CESTAT Chandigarh observed that the core issue was the demand for interest on supplementary invoices and the invocation of the extended limitation period. Noting that the appellant deposited the duty and interest under protest, the tribunal emphasized the lack of a clear stance during the disputed period on interest liability.
Referring to the Hon’ble Apex Court’s final decision in 2019 and aligning with precedents like Super Threading India Pvt. Ltd. and KEC International Ltd., the tribunal concluded that the extended period should not be invoked without evidence of fraud. Citing the Punjab and Haryana High Court’s decision in Neel Metal Products Ltd., the tribunal held that the demand for interest beyond the normal limitation period is not justified.
The order pronounced on 27.10.2023 sets aside the demand, remanding the matter to the original authority to recalibrate the demand for the normal limitation period, with excess amounts paid returned to the appellant.
In conclusion, the CESTAT Chandigarh, in the case of NTF (India) Pvt. Ltd. vs. C.C.E, quashed the demand for excise duty interest, citing the absence of clarity on interest liability during the disputed period. The tribunal’s decision aligns with legal precedents, emphasizing the need for evidence of fraud to invoke the extended limitation period. This verdict provides clarity on the contentious issue, offering relief to the appellant and setting a precedent for similar cases.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the impugned order dated 19.11.2010 vide which the Ld. Commissioner (Appeals) has upheld the Order-in-Original confirming the demand of interest on differential duty paid by the appellant.
2. Briefly the facts of the present case are that the appellant is engaged in the manufacture of auto parts falling under Chapter No. 8708.00 of the First Schedule to the Central Excise Tariff Act, 1985 and sell them to M/s Maruti Udyog Ltd. (MUL) & others. Due to revision of prices the appellant raised the supplementary invoices and paid the excise duty of differential amount. Two show cause notices dated 26.10.2004 demanding interest of Rs. 38,07,947/- covering the period 1999 to 2004 and another show cause notice dated 09.02.2007 demanding interest amounting to Rs. 81,131/- for the period March, 2005 to November, 2006 were issued and after following the due process, the adjudicating authority confirmed the demand of Rs. 38,89,078/- as interest on delayed payment under Section 11AB read with Section 11A of the Central Excise Act, 1944. Aggrieved by the said order, the appellant filed appeal before the Commissioner (Appeals) who rejected the appeal and upheld the Order-in-original.
3 .Heard both the parties and perused the record.
4. Counsel for the appellant submits that the impugned order is not sustainable in law as the same has been passed by not properly appreciating the facts and the law and also violating the principles of natural justice. He further submits that the Commissioner (Appeals) had not given any opportunity of hearing to the appellant and the appellant had also not received any notice regarding the date of hearing i.e. 10.08.2010.
5. He further submits that the impugned order is liable to be set aside only on the ground of violation of principles of natural justice. He further submits that the appellant has deposited the entire amount of interest under protest. Ld. Counsel further submits that the only issue in the present case is demand of interest on differential duty. He further submits that during the disputed period there were divergent views on the issue of liability of interest on payment of central excise duty while issuing supplementary invoices under the Central Excise Act, 1944. He further submits that the Hon’ble Supreme Court in the case of Steel Authority of India Ltd. Vs. CCE, Raipur reported in 2015 (326) E.L.T. 450 (S.C.) referred the issue to the Larger Bench of the Hon’ble Supreme Court which finally decided the issue on 08.05.2019 reported in 2019 (366) E.L.T. 769 (S.C.).
6. He further submits that during the disputed period, the issue of liability of interest on payment of Central Excise duty paid on supplementary invoices was not free from doubt and was finally settled by the Larger Bench of the Apex Court on 05.2019, hence, the allegation of the department, regarding willful suppression of facts for invoking the extended period of limitation does not survive in the present case. It is not the case of the department that the Central Excise duty liability itself was not discharged on the supplementary invoices issued by the appellant.
7. Counsel further submits that the extended period has wrongly been invoked in the present case and the liability of interest will be restricted to the normal period of limitation only.
In support of his submission, he relied upon the following decisions:
– Super Threading India Pvt. Ltd. Vs. Commissioner of Central Excise, Ludhiana [2021 (377) ELT 462 (Tri.-Chandigarh)]
-KEC International Ltd. Vs. Commissioner of Central Excise, Jaipur [Final Order No. 50246-50248/2022].
8. Ld. Counsel also relied upon the decision of the Punjab and Haryana High Court in the case of Neel Metal Products Ltd. Vs. Commissioner of Central Excise, Delhi-III [2014 (306) ELT (P&H)] wherein it was held that interest cannot be demanded beyond the normal period of limitation of one year in the absence of fraud/collusion etc.
9. On the other hand, Ld. DR reiterated the findings of the impugned order and submitted that the issue of interest on supplementary invoices has been settled by the Hon’ble Apex Court in the case of Steel Authority of India Ltd.-2019 (366) L.T. 769 (S.C.)
10. He further submits that the Commissioner (Appeals) has relied upon the decision of the Hon’ble Apex Court in the case of CCE Pune Vs. M/s SKF India Ltd reported in 2009 (239) E.L.T. 385 (S.C.). He further submits that the decision of Punjab and Haryana High Court in the case of Neel Metal Products Ltd. relied upon by the appellant has been challenged before the Hon’ble Apex Court which has been admitted by the Hon’ble Apex court but there is no stay on the decision of the Punjab and Haryana High Court.
10. After considering the submissions of both the parties and perusal of the material on record, we find that the only issue is involved in the present appeal is demand of interest on supplementary invoices by invoking the extended period of We also find that the appellant deposited the duty on supplementary invoices as and when the supplementary invoices were issued. We also find that the appellant has deposited the interest under protest and has submitted that in the present case invoking the extended period of limitation to demand the interest alleging suppression is not sustainable because during the relevant period there were divergent views on the issue of liability of interest on payment of central excise duty while issuing supplementary invoices under the Central Excise Act, 1944.
11. We also find that the Hon’ble Apex Court finally settled the issue of interest on supplementary invoices on 08.05.2019 reported in 2019 (366) E.L.T. 769 (S.C.). We further find that this Tribunal in the case of Super Threading India Pvt. Ltd. and KEC International Ltd. cited (Supra) had held that extended period of limitation cannot be invoked as there is no fraud/mis-statement with intent to evade payment of duty. We also find that the decision of the Punjab and Haryana High Court in the case of Neel Metal Products Ltd. cited (Supra) has observed in para 8 & 9 as under :
‘8. Learned Counsel for the appellant submits that the present petition is squarely covered in favour of the appellant by the decision of this Court in M/s. Jai Bharat Maruti Limited’s Case (Supra) and may be disposed of in the same terms. In the said judgment, it has been held as under:-
“We have heard counsel for the parties, perused the impugned order and find no reason to differ from the opinion recorded by the Delhi High Court in Hindustan Insecticides Ltd v Commissioner Central Excise, LTU (supra) The CESTAT vide a common order, dismissed appeals filed by the appellant and M/s Hindustan Insecticides Ltd. The order passed by CESTAT has been reversed by the Delhi High Court by relying upon judgments in Kwality Ice Cream Company and Another v. Union of India and others ((2012) 281 ELT 507) and Commissioner v, TVS Whirlpool Limited [2000 (119) ELT. A177 (SC)] and holding that as the period of limitation that applies to recovery of the principal amount shall also apply to the claim for interest thereon, the demand is time barred. The opinion recorded by the Delhi High Court in Kwality Ice Cream Company and Another v. Union of India and others (supra) was followed by the Punjab and Haryana High Court in Commissioner, Central Excise Commissionerate v. VKN
Industries Private Limited (CEA No. 67/2011 (O&M), decided on 17-4 -2012), by holding as follows:-
“6. There is no dispute that assessee has paid the differential duty on supplementary invoices regularly and has shown the same in the ER-I returns, which were filed regularly before the department, therefore, issuance of show cause notice for interest on the delayed payment should also be within a period of one year as stipulated under Section 11-A of the Act. Therefore, department has absolutely no junsdiction to issue show cause notice after expiry of the period of limitation for interest on the delayed payment for the period from 2002-03 to 2005-06 Division Bench of Delhi High Court in the case of Kwality Ice Cream Company and Another v. Union of India and Others, WP (C) 14414-15/2006 decided on 18-1 -2012 has also held that period of limitation, unless otherwise stipulated by the statute, which applies to a claim for the principal amount should also apply to the claim for interest thereon.”
A similar view has been taken by the Bombay High Court in Central Excise Appeal No. 116/2011, Commissioner of Central Excise, Mumbai-lll v. Supreme Petrochem Limited and the Gujarat High Court in Tax Appeal No. 56/2011. Commissioner of Central Excise and Customs, Vadodara-ll v. Gujarat Narmada Fertilizers Company Limited (2012 (285) ELT 336 (Guj). The respondents do not allege much less assert that any other period of limitation applies or that short payment was made due to fraud, collusion etc, and, therefore, while following the aforesaid judgments, we find no reason to accept arguments addressed by counsel for the revenue and have no hesitation in holding that period of one year would apply to the present case.
In view of what has been stated hereinabove, we answer the questions of law in favour of the appellant, set aside the impugned order and allow the appeal, in terms of judgment in Hindustan Insecticides Ltd. v. Commissioner, Central Excise, LTU (supra),” Learned counsel for the respondent does not dispute the applicability of the above mentioned judgment.
9. In view of the above, the substantial questions of law are answered in favour of the appellant and against the Revenue. The appeal stands allowed.”
12. Therefore, by following the ratio of the decision of the Punjab and Haryana High Court cited (Supra), we hold that invoking the extending period of limitation is not sustainable and the demand of interest by invoking the extended period of limitation is not justified and we set aside the same by remanding the matter to the Original authority to requantify the demand only for the normal period and any amount deposited over and above the normal period of one year should be returned back to the appellant as he has paid the entire disputed demand of interest under protest.
(Order pronounced in the open court on 27.10.2023)