TaxTMI 
TaxTMI 
2010 (12) TMI 997
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....said policy resolution, various notifications were issued under the Act. One of the notification dated 8-7-1999 was issued by the Joint Secretary to the Govt. of India, Ministry of Finance, Department of Revenue granting exemption to the new industrial units from payment of central excise duty. As per the said notification, the new industrial unit first to pay the duty as applicable and thereafter the Department was to refund the same within fifteen days. Accordingly a sum of Rs. 14,08,88,610/- was refunded to the petitioner Company for the month of April, May and June, 2000. However, by Section 154 of the Finance Act, 2003, the exemption granted to the cigarette manufacturing unit was withdrawn retrospectively and it was provided that while the excise duty already refunded to the unit was liable to be recovered, no further refund will be made and the unit would be liable to pay excise duty not paid for the period while the exemption notification was in force between 8-7-99 and 27-1-2001. The petitioner challenged the validity of Section 154 as introduced by the Finance Act, 2003 by filing a writ petition being W.P.(C) No. 4398/2003. 4. This Court by an interim order dated ....
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....dents from recovering the interest from the petitioners, a writ appeal being WA No. 84/07 was preferred in which an interim order was passed in favour of the petitioners on 26-2-07 granting stay of recovery of the interest. Being aggrieved, the respondents preferred an appeal before the Apex Court being Special Leave to Appeal (Civil) No. 15290/07. The appeal has been disposed by order dated 8-10-07 requesting this Court to dispose of the writ petitions expeditiously without being influenced by the observations made in the order in writ appeal. 9. By Annexure-F impugned order dated 25-10-07, the petitioner in W.P.(C) No. 839/07 was requested to pay the basic duty and additional excise duty alongwith interest of Rs. 4,75,93,340/- and to submit the payment towards issuing authority, i.e. Central Excise, Guwahati-IV Range. 10. Annexure-K is the detention order dated 5-7-06 issued by the Deputy Commissioner of Central Excise in exercise of power conferred by Clause (a) of sub-section (i) of Section 142 of the Customs Act, 1962 requiring and requesting that the amount of Rs. 5,60,78,347/- should be deducted from any money payable to the petitioners by any officer of Cust....
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....d in law and ought to be quashed/set aside by this Court. It is stand of the petitioners that it is self evident from the rate of interest being 15% that the charge is in the nature of penalty and not in the nature of compensation. 14. The petitioners have further contended that during the time when the retrospective amendment under Section 154 of the Finance Act, 2003 came into force, the matter being sub judice before this Court and this Court having stayed the recovery, refunds, based on any notification, amendment or circular and further that order of stay of recovery passed by this Court being continued even during the time the matter was under challenge by the petitioners and respondents, the respondents have no legal or constitutional or any other right that may accrue in law to levy and demand the amount of interest amounting to Rs. 5,60,78,347/-. Be it stated here that while the petitioner had challenged the Finance Act, 2003 the respondents had challenged the judgment and order of this Court granting the benefits in favour of the petitioners. 15. It is the further stand of the petitioners that the demand for interest upon the amounts which were legally ref....
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....l Nathmal Trust). (2) (1999) 3 SCC 657 (State of Kerala and others v. V.R. Kalliyanikutty and Anr.). (3) (2005) 1 SCC 657 (Commissioner, Trade Tax, U.P. v. DSM Group of Industries). 20. On the other hand, Mr. Sarmah, learned Standing counsel, Central Excise referring to the decision in R.C. Tobacco (supra) submitted that the impugned action on the part of the respondents is sustainable in law. During the course of hearing, he also produced the statement of account dated 12-8-2010 prepared by the Assistant Commissioner, Central Excise Division, Guwahati indicating the details of the recoveries made from cigarette units under Guwahati Central Excise Division pursuant to the aforesaid judgment of the Apex Court upholding the validity of Section 154 of the Finance Act, 2003. In the said statement, the parties mentioned are : (1) M/s. Frontier Multiproducts, EPIP Amingaon, Guwahati-31 (2) M/s. R.C. Tobacco Pvt. Ltd. Kalapahar, Guwahati-16 (3) M/s. Assam Cigarettes Co. Pvt. Ltd., Amingaon, Guwahati-31 (4) M/s. Assam Toba....
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....trospectively at all material times. (3) No suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for any action taken or anything done or omitted to be done, in respect of any goods under the said notifications, and no enforcement shall be made by any court, tribunal or other authority of any decree or order relating to such action taken or anything done or omitted to be done as if the amendments made by sub­section (1) had been in force at all material times. (4) Recovery shall be made of all amounts of duty or interest or other charges which have not been collected or, as the case may be, which have been refunded but which would have been collected, or, as the case may be, which would have not been refunded if the provisions of this section had been in force at all material times, within a period of thirty days from the day on which the Finance Bill, 2003 receives the assent of the President, and in the event of non-payment of duty or interest or other charges so recoverable, interest at the rate of fifteen per cent per annum shall be payable from the date immediately after the expiry of the said period of thirty....
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....with a view to collect any amount refunded as ordered by the Apex Court, but only to impose a penalty by way of interest upon the legitimate and legal refund amount which has been ordered to return and which has been returned and therefore, it is in excess of jurisdiction. According to him, during the period of stay the petitioner cannot be said to be in default of payment of central excise duty as during the said period the petitioners were not bound to pay and therefore no interest amount can be levied, demanded or recovered from the petitioners. 26. Section 154 of the Finance Act, 2003 allows recovery retrospectively and therefore cascading effect of interest to be charged from retrospective dates to the date of actual payment will have to be executed. If the contentions of the petitioners is to be accepted, same would mean that the petitioners could have delayed in paying the principal amount indefinitely attracting nil rate of interest. In fact, the petitioners had preferred a review petition, against the same Apex Court's judgment and the same was also dismissed. 27. The provision of Section 154 of the Finance Act, 2003 under which recovery of duties was to be....
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....ct, 1968. It was held that the scheme of the Act is to provide for speedy recovery not merely the public revenue, but also the other kind of loans which are required to be recovered speedily in public interest. Examining as to whether the time barred claims of the State Financial Corporation and the banks can be recovered under Section 71 of the Act, it was held that looking to the scheme of recovery and refund amount due under Section 71 and those amounts which the creditor could have recovered had he filed a suit. In the instant case, it is not the case of any time barred claim. Thus, this case is also no help to the case of the petitioners. 30. In DSM Group of Industries (supra), the respondent company had claimed exemption under particular notification on the ground of expansion, diversification and modernization which was rejected amongst others on the ground that the company was in arrears of tax. Posing the question as to whether the company was in arrears of tax, the Apex Court held that during the period of stay, the respondents were not bound to pay and therefore, they could not have been said to be in arrears. In the said case, the respondent company had obtained....
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.... had manufactured the cigarettes. It could not have been predicted with any certainty that the appeals of the Union of India would fail. By enacting Section 154, Parliament has forestalled a decision by this Court and in effect taken away the basis for the decisions of the High Court. In the circumstances, it could not be said that the financial burden was unforeseen or unforeseeable. 50. Furthermore having upheld the constitutional validity of Section 154, it would be a pyrrhic victory for the Union of India if they could not in fact recover the tax. It is not a case where the legislation has merely withdrawn the exemptions. The consequences of the withdrawal have been statutorily provided for including the recovery of the excise duties refunded or not paid. The effective period of such imposition is about eight months. The State has been deprived of revenue without any corresponding benefit. It may be that the retrospective operation may operate harshly in some cases, but that would not by itself invalidate the demand. It needs to be emphasized that in effect the retrospective operation extended over a very short period and principles of equity must give way to express st....