Rehabilitation scheme cannot waive statutory excise interest and penalty where collected duty was not remitted

A sick industrial company's rehabilitation scheme could not override statutory excise liabilities where the company had collected duty from customers but failed to remit it. The Court held that the scheme might regulate repayment for revival, but it could not defeat the excise department's right to recover dues, especially since the Central Excise law did not permit waiver of interest. As the principal duty had substantially been paid and the dispute concerned statutory interest and related reliefs, public revenue could not be lost under the guise of rehabilitation. The order refusing waiver of excise interest and penalty was upheld.

---

---

Issues: Whether the excise duty, interest and penalty liabilities could be waived or diluted under the rehabilitation scheme framed for a sick industrial company, and whether the order directing payment of the excise department's dues called for interference.

Analysis: The company had collected excise duty from customers but had not remitted it to the department, and the long-running rehabilitation process under the sick industrial companies legislation had already extended over many years. The scheme could regulate repayment arrangements for revival, but it could not override the statutory liability of the excise department to recover its dues where the Central Excise law did not provide for waiver of interest. The Court also noted that the principal duty had substantially been paid and that the remaining dispute was essentially about statutory interest and allied reliefs. In these circumstances, the public revenue could not be deprived under the guise of rehabilitation, and the appellate order refusing waiver was justified.

Conclusion: The refusal to waive excise interest and penalty was upheld, and the challenge by the company failed.

---