BIFR rehabilitation scheme did not waive central excise interest where protection was not expressly granted.

A BIFR-sanctioned rehabilitation scheme did not automatically waive interest liability under the Central Excise Act where the scheme expressly referred to waiver under the Income-tax Act but not excise interest or penalty. Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985 could not be used to displace the statutory levy because the scheme did not specifically cover it, and prior orders had left waiver open for departmental consideration on merits. The interest demand was therefore sustained, and the writ challenge failed.

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Issues: Whether the demand of interest under Section 11AA of the Central Excise Act, 1944 could be invalidated on the basis of the BIFR-sanctioned rehabilitation scheme and Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Analysis: The rehabilitation scheme did not expressly grant waiver of interest and penalty under the Central Excise Act, 1944, though it specifically referred to waiver under the Income-tax Act, 1961. The scheme therefore did not clearly extend protection against central excise interest liability. Even on the assumption that such protection could be implied, the Delhi High Court and AAIFR had left the question of waiver open for consideration by the Department, which displaced any claimed finality in the scheme. Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985 could not be invoked to defeat the statutory levy where the scheme did not specifically cover it and the later orders permitted examination of the issue on merits.

Conclusion: The challenge to the interest demand failed. The Court upheld the Department's action and rejected the writ petition.

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