CESTAT rules on excise department's wrongful order

CESTAT rules on excise department's wrongful order

The appellant had challenged the directive for the adjustment of refund interest

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the excise department cannot avail the benefit of the extended period of limitation if the taxpayer has neither committed any fraud nor presented a misleading account and was also not stubborn in behavior.

The Judicial Member Anil Choudhary was considering an appeal by KEC International Ltd wherein the appellant had challenged the order of the excise department by invoking the Central Excise Act for the adjustment of the interest out of the subsequent refund.

The bench held that the appellant had been filing the Income Tax Returns (ITRs) and paying the taxes regularly. Thus, the invocation of the extended period of limitation was wrong.

Relying on an earlier order of the Delhi High Court, which was based on the ruling of the Supreme Court, CESTAT said, "The benefit of an extended period of limitation is not available to the revenue department, as there is no element of fraud, misstatement or contumacious conduct on the part of the appellant. Thus, the demand for interest is hit by limitations. Accordingly, these appeals are allowed and the impugned orders are set aside."