By TIOL News Service

MUMBAI, APRIL 12, 2018: THE respondent is engaged in the manufacture of various petroleum products. They were receiving LPG from ONGC's Uran premises through pipelines. The LPG was cleared from ONGC's Uran without payment of duty under AR-3A bond procedure. Part of the LPG was captively consumed but on which no duty was being paid.On initiation of investigations against ONGC, the respondent paid the duty for the period July 1997 to July 2002 in the month of September 2002 and took CENVAT credit of the same.

Separate proceeding for disallowing the CENVAT credit was initiated but the same was dropped by the Commissioner.

Since the respondent had not paid interest on the Excise duty paid for the period July 1997 to July 2002, a SCN came to be issued for its recovery along with imposition of penalty.

The Commissioner dropped this proceeding and, therefore, Revenue is before the CESTAT.

The AR submitted that before issuance of SCN, letters dated 27.09.2003 and 10.12.2003 were written to the respondent to pay interest but they failed to do so and hence the SCN. It is also contended that the conclusion by the Commissioner that there is no loss to the department as the respondent was entitled to CENVAT credit; that non-payment of duty was a procedural lapse is not correct in view of the provisions of section 11A(2B) of CEA, 1944 which mandate payment of interest u/s 11AB and also does not speak of determination of duty.

The respondent assessee supported the order and submitted that law of limitation is applicable for interest and imposition of penalty. Reliance is placed on the decisions in Hindustan Insecticides Ltd. - 2013-TIOL-631-HC-DEL-CX, Kwality Ice Cream Company - 2012-TIOL-252-HC-DEL-CX and Gujarat Narmada Fertilizers Co. Ltd. - 2012-TIOL-273-HC-AHM-CX.

The Bench considered the submissions and observed –

+ Revenue is essentially in appeal against the order on the ground that the provisions of Section 11AB can be invoked in absence of demand of duty paid under Section 11A(2) or paid under Section 11A(2B).

+ The review order does not challenge the finding of the Commissioner that there was no malafide in the respondent action. In fact the impugned order expressed gratitude to the respondent insofar as they have paid duty which was beyond the normal period of limitation.

Concluding that in view of the Gujarat High Court decision in Gujarat Narmada Fertilizers Co. Ltd. (supra), no demand of interest could be made beyond the period of limitation when the Revenue has failed to show any ground for invocation of longer period of limitation, the Revenue appeal was dismissed.