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Issues: (i) Whether the show-cause notice demanding excise duty for the past period was in accordance with the Supreme Court's interim directions and within limitation; (ii) whether interest could be levied on the alleged excise duty dues.
Issue (i): Whether the show-cause notice demanding excise duty for the past period was in accordance with the Supreme Court's interim directions and within limitation.
Analysis: The interim directions of the Supreme Court permitted recovery only where a notice under Section 11A had already been served and the claim was confined to the prescribed six-month period, or where a fresh notice was issued within that limit. No notice under Section 11A had been issued to the appellants before the impugned notice. The demand in the show-cause notice covered the period 1-6-1981 to 15-3-1983, which was far beyond six months. Entries in RT-12 returns could not substitute for a statutory demand notice under Section 11A.
Conclusion: The demand of duty was contrary to the Supreme Court's directions and barred by limitation. It was not sustainable and went in favour of the assessee.
Issue (ii): Whether interest could be levied on the alleged excise duty dues.
Analysis: There was no provision in the excise law authorising levy of interest on duty dues. The claim of interest could not be justified merely on the basis of an interim order passed in writ jurisdiction, especially when such an order was made in a different context and could not override Article 265 of the Constitution of India.
Conclusion: Interest was not leviable on the alleged duty dues. This issue was decided in favour of the assessee.
Final Conclusion: The impugned demand and the consequential interest claim were set aside, and the appeal succeeded.
Ratio Decidendi: A demand for excise duty must be raised by a statutory notice within the prescribed limitation period, and interest on duty dues cannot be levied without express statutory authority.
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