Interest and penalty not attracted where duty had already been paid before the later amendment to recovery provisions.

Interest and penalty were considered in relation to a confirmed duty demand arising from failure to maintain separate inventory of raw material used in exempted final products. The duty demand had already been paid, and the later amendment in Clause 82 of the Finance Bill, 2005, including its Explanation, was held not to fasten interest or penal liability on an amount discharged in 2000. The duty demand itself remained unaffected and was upheld, but no interest or penalty was payable.

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Issues: Whether interest and penalty were leviable on the confirmed duty demand arising from non-maintenance of separate inventory of raw material used in exempted final products.

Analysis: The duty demand was not disputed and had already been paid. The only question was whether the later amendment in Clause 82 of the Finance Bill, 2005 and its Explanation could fasten liability to interest and penalty in respect of an amount that had been paid much earlier. The language of sub-clause 2(b) of Clause 82 and the Explanation was taken to support the view that the amended recovery and penal consequences did not apply to the present case, where the amount had been discharged in 2000. At the same time, the duty demand itself remained unaffected.

Conclusion: The appellants were held not liable to pay interest or penalty, but the duty demand was upheld.

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