Retrospective Cenvat credit amendment does not support penalty or interest where duty was substantially paid in time.

Wrongful availment of Modvat/Cenvat credit on inputs used in exempted and dutiable goods justified recovery after retrospective amendment, but penalty could not be imposed retrospectively because it is penal in character. The assessee had reversed the credit when pointed out and had substantially paid the duty before the order-in-original, with the balance paid within the stipulated time. On those facts, the amended interest provision did not apply, as interest was chargeable only where the amount found due remained unpaid within the time fixed in the order. Penalty was therefore set aside and no interest was leviable.

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Issues: Whether penalty and interest could be sustained on wrongful availment of modvat/cenvat credit after retrospective amendment, and whether interest was payable when the duty determined was substantially paid before the order and the balance was paid within the stipulated time.

Analysis: The assessee had not maintained separate accounts for inputs used in exempted and dutiable goods and had wrongly availed credit, but reversed the credit when pointed out and paid the major part of the duty even before the order-in-original. The balance duty was also paid within the time allowed. The retrospective amendment enabled recovery of the duty, but penalty being penal in character could not be imposed retrospectively. As to interest, the amended provision applied only where the amount found due was not paid within the time stipulated in the order, which was not the factual position here.

Conclusion: The penalty was rightly set aside and no interest was leviable; the assessee succeeded.

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