Prospective application of later benchmark condition cannot defeat earlier deferral eligibility or support interest demand.

A benchmark condition introduced by G.O.Ms.No.119 dated 13.4.1994 could not be applied to an industrial unit that had already commenced commercial production and obtained an eligibility certificate under G.O.Ms.No.500 dated 14.5.1990. The later condition operated prospectively only, so it could not be fastened on units whose eligibility had already crystallised under the earlier deferral scheme, and mere rescheduling of the deferral period did not alter that basis. As the inspection report also found no deviation or wrong availment of the deferral facility, the demand of interest on that footing was unsustainable.

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Issues: Whether the benchmark condition introduced by G.O.Ms.No.119 dated 13.4.1994 could be applied to an industrial unit that had already obtained an eligibility certificate under G.O.Ms.No.500 dated 14.5.1990, and whether interest could be demanded on the footing of wrong availment of the deferral benefit.

Analysis: The unit had commenced commercial production and obtained its eligibility certificate before the later Government Order came into force. The later order introduced the benchmark requirement for the first time and, on the reasoning adopted in earlier binding decisions, it could operate only prospectively. A condition subsequently introduced could not be fastened on units whose eligibility had already crystallised under the earlier scheme, and mere rescheduling of the deferral period did not alter the original basis of eligibility. The inspection report also recorded that there was no deviation or wrong availment of the deferral facility.

Conclusion: The benchmark condition in G.O.Ms.No.119 dated 13.4.1994 was inapplicable to the assessee, and the demand of interest on the allegation of wrong availment was unsustainable.

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