1. Being aggrieved with the order passed by the Commissioner (Appeals), the revenue has preferred the following appeal. While allowing the appeal filed by the appellant the Commissioner (Appeals) has observed as under: I find that in the show cause notice dated 22.5.2000 issued to the appellant, the appellant was directed to show cause as to why the penalty should not be imposed upon them as provided under Section 76 and 77 of Chapter V of the Finance Act, 1994 for contravention of provisions of Section 68 and 70 respectively of Chapter V of the Finance Act, 1994. Section 68 ibid deals with the payment of service tax at the rate specified in Section 66 in such manner and within such period as may be prescribed. The appellant was failed to pay the service tax in such manner and within such period prescribed and hence penal action under Section 76 was proposed in the show cause notice. There is no demand of interest under Section 75 in the show cause notice. However, instead of imposing penalty under Section 76 for delayed payment of service tax, the adjudicating authority has demanded interest of Rs. 1,30,067/-under Section 75 which was never proposed in the show cause notice. Therefore, the adjudicating authority has traveled beyond the scope of the show cause notice.
The Hon'ble CESTAT, Mumbai in the case of Bayer ABS Ltd. v. C.C.E., Vadodara I has held that findings beyond the charges in show cause notice are unsustainable and liable to be set aside. The Hon'ble Tribunal in the case of Sunrise Structural & Engg. (P) Ltd. reported in 2002 (148) ELT 503 (Tri-Mumbai) has held that manufacturing profit could not be added to the assessable value, as the value was beyond the scope of show cause notice. The appeal filed by the Revenue against this order of the CESTAT was dismissed by the Hon'ble Supreme Court of India vide order . Therefore, without going into the merits of the case, since the interest amount was not demanded in the show cause notice but was written, the order is set aside in view of the above decisions.
2. The revenue's grievances that no demand notice or written notice is required to be issued for confirmation of interest which is a liability accruing as a consequence of payment. Reliance has been placed upon the Tribunal's decision in the case of TCP Ltd, v. C.C.E., Madurai 2006 (1) STR 134 (Tri-Chennai) and on the Hon'ble Supreme Court decision in the case of Commissioner of Trade Tax, Lucknow v. Kanhai Ram Thekedar 2005 (185) ELT 5 (SC).
3. In the above referred judgment of Hon'ble Supreme Court in para 16 & 17 of their judgment has observed that accrual of interest is automatic and no separate notice was required to be served in that respect. As such, the Supreme Court observed that order of the High Court deleting the interest levied by the authorities on the ground that no notice was served, was not justified. Similarly, the Tribunal in the case of TCP Ltd. referred supra has held that an belated payment of tax, interest levy is mandatory. Inasmuch as the impugned order of Commissioner (Appeals) is against the ratio of the law declared in the above decision, I set aside the impugned order and allow the revenue's appeal. As the Commissioner (Appeals) has not dealt with the merits of the case, I remand the matter to him for decision on merits.