TaxTMI 
TaxTMI 
2008 (3) TMI 215
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was presented in the Bank. 3. The facts in all the matters are almost common, except the final product manufactured by the different appellants in different appeals. 4. We think it appropriate to give brief resume of the facts giving rise to the present controversy. 5. On different dates, notices were issued by the competent authority, calling upon the assessees to show cause as to why the amounts mentioned in the notice representing Modvat credit, availed by them on HSD oil, be not recovered, as the Modvat credit is not available to them. It is at this stage, that various petitioners filed writ petitions before this Court, challenging the very jurisdiction of the authority to initiate the proceedings, and for that purpose the assessee relied upon certain judgments of the Tribunal, rendered in the case of India Cements Ltd. Vs. CC & CE, Hyderabad reported in 1997(95) ELT-520, and Jindal Polymers Vs. Commissioner of Central Excise Indore reported in 1999(114) ELT-322, wherein the learned Tribunal had taken the view, that the Modvat credit is available on the HSD oil to the assessee. In those writ petitions, notices were issued, and interim stay were granted. The writ petit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force." 6. On passing of this Finance Bill, these writ petitions were amended, and the provisions of the Finance Act were challenged being ultra vires to the Constitution. Of course, those amendment applications were allowed, and the bunch of the writ petitions was ultimately decided by the Division Bench, vide judgment dt. 3.4.2002, holding the validation Act to be intra-vires, and dismissing the writ petitions, finding no merits therein. 7. It may also be mentioned at this stage, that one matter, being in Commissioner of Central Excise, Hyderabad Vs. Associated Cement Companies Ltd. Mancherial, reported in (2003) 9 SCC-74, came to be decided by Hon'ble the Supreme Court, and therein a view was taken, that the Tribunal was justified in arriving at the conclusion, that the assessee was entitled to get the benefit of notification till Rule 57-B is amended, and the appeal was dismissed. Then, it was held that the assessee was entitled to Modvat credit. However, a review petition was file....
X X X X Extracts X X X X
X X X X Extracts X X X X
....02, obviously because, during the interregnum period there were interim stay by this Court. 10. Then, the orders of the original authority were challenged by the Department in appeal, and the learned Appellate Authority allowed the appeal, and held, that the present appellants are liable to pay interest @ 24% p.a. from 12.6.2000 till the date of payment, in view of the provisions of Section 112. It was also found, that the adjudicating authority issued notice to the assessee, incorporating the liability of interest with the demand in the impugned notice. 11. Appeals against these orders were filed before the learned Tribunal, and the appeals of one of the assessee, being M/s. Maharaja Shree Umaid Mills Ltd. (Appeal No. E/45-48/2003/NB/C and Appeal No. E/263/2003/NB/C did come to be decided by the learned Tribunal vide judgment dt. 1.10.2003, holding, that the extent of credit that has been taken or utilised, does not require any determination by the Central Excise Officers, and that, in the instant case no such determination is even envisaged, as Section 112(2)(b) is very categoric in its terms, and it says "recovery shall be made of all the credit which have been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hem, at a point of time when the provisions of Section 112 were not on the Statute Book, but then, those notices have to be carried to their logical conclusion, and determination is to be made, demand notice is to be issued, payment can be made within the permissible time period thereafter, and the liability of interest arises only from the date after expiry of such permissible period of time. 14. Referring to the judgment of original authority, in Maharaja Shree Umed Mills's case, it was contended, that in those cases amount was deposited in October, 2000, but the amount could not be appropriated before the adjudication, and it was by the order of the original authority only, that amount has been ordered to be appropriated in Government account. It is also contended, that the Act, or the Rules, does not contain any provision for assessee's entitlement to interest, in case, on adjudication it is found, that any excess amount has been paid by the assessee, obviously therefore, and as a necessary corollary, no liability of interest could be attracted against the assessee also, before adjudication. 15. Then, the next submission made was, that a bare reading of provisions of Sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said period under the Central Excise Act or any rules made thereunder, to deny the credit of any duty in respect of high speed diesel oil, and also to disallow such credit to be utilised for payment of any kind of duty on any excisable goods shall be deemed to be, and to always have been, for all purposes, as validly and effectively taken or done, as if the provisions of sub-section (1) had been in force at all material times, and accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, which according to the learned counsel only means, that if any action has been taken for denying the credit, that is validated, and if any order is passed permitting the credit, still the credit will stand denied obviously, therefore, action is to be taken for recovery of the amount of credit taken, and again, obviously, by taking appropriate proceedings, in accordance with law. Then, submitting on clause (b), which is precise bone of contention, of sub-section(2), it was contended, that all that it permits is that, or provides that, recovery shall be made of all the credit of duty, which have been taken or utilised, but which would ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or contested. Then, relying upon the judgment of Hon'ble the Supreme Court, in Collector of Central Excise Vs. Raghuvar (India) Ltd. reported in (2000) 5 SCC-299, it was contended, that action for recovery under Section 57-I, as it stood prior to 16.10.1988, is not subject to the limitation period provided under Section 11-A of the Central Excise Act, and that, even if Section 11A is taken to be containing provisions of general nature, the provisions of Modvat Scheme are special ones, and the latter would therefore govern the scheme. Learned counsel means, that in the present case, the provisions of Rule 57-I, being a special provision regarding Modvat Scheme, the general provisions of Central Excise Act, contained in Section 11A, need not be gone into. Then, it was contended that from the reading of provisions of Section 112(2)(b), and comprehending the matter under the scheme of things, it is clear, that the contemplated adjudication has to be only qua making arithmetical calculation, but then per force the provisions of Section 112(2)(b), the liability of interest would start from the beginning, i.e. on expiry of 30 days from the date of receipt of assent of the President to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... adjudicated, consequent upon the notice. It was also contended, that Section 112(2)(b) is not in the nature of any levy, or impose liability, rather is in the nature of concession for the assessee, who has been allowed or disallowed the credit, and thus the demand of interest is bad. 19. Learned counsel for the appellants invited our attention to certain provisions of Central Excise Rules, Central Excise Act, so also other fiscal statutes, to show, that where the liability of interest was intended to be attracted, from any date anterior to the date of determination of the amount, specific provision in that regard has been made, and circumstances for attracting such retrospective liability has been provided, while where such retrospective liability is not contemplated, the provision has been made for payment within the specified time of the raising of demand, and then liability of interest is attracted, and from this, it was contended, that even from a collective reading of Rule 57I and Section 112(2)(b), it is clear, that the liability of interest is not attracted from any retrospective date. It is maintained rather reiterated, that it is only sub-section (1) which is couched w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er shall, upon a written demand being made by the [Assistant Commissioner of Central Excise], pay the duty leviable on such inputs within three months from the date of receipt of the notice of demand. (3) Where a manufacturer or an assessee fails to pay the amount determined under sub-rule (1) or sub-rule (2) within three months from the date of receipt of demand notice, he shall pay, in addition to the amount so determined, interest at such rate, as may be fixed, by the Central Board of Excise and Customs under Section 11AA of the Act, from the date immediately after the expiry of the said period of three months till the date of payment. (4) Where the credit of duty paid on inputs has been taken wrongly by reason of fraud, wilful misstatement, collusion or suppression of facts, or contravention of any of the provisions of the Act, or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed as determined under clause (iii) of sub-rule (1) shall also be liable to pay a penalty equal to the credit so disallowed. Explanation I- Where the credit disallowed is reduced by the Commissioner of Ce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s passed after commencement of the Finance Act of 2000, the Modvat credit was held to be available, and then, when attention was invited to Section 112 of the Finance Act, it was held, that credit is not available, and then in para-5, it has been held as under:- "5. Though the assessee is not entitled to the benefit as aforesaid, yet we cannot ignore the fact that the aforesaid amendment came into force on 1^st April, 2000 when the order of the tribunal dated 8^th September, 1999, in favour of the assessee was holding the field and it is being set aside today by this order. In this view, the time to make payment under Section 112(2)(b) has to commence only from today.." 24. We seek sufficient guidance from this judgment, inasmuch as at least till rendering of this judgment by this court on 3.4.2002, the present assessees/appellants were having judgment of the Tribunal in India Cement's case, and Jindal Polymers's case, and the judgment of the Tribunal in Associated Cement Companies Ltd.'s case as well in their favour, and as such the appellant can be said to have stood well advised in challenging the contemplated action of the Department, by filing litigations. 25. It alwa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taken is not a pre-condition, then at least the Department would have given up the notice originally issued under Rule 57-I, and would have straightway addressed communication to the assessees, at least immediately after the judgment was rendered by this Court on 3.4.2002, calling them upon to make payment of the credit availed, immediately, and then probably might have laid claim for interest after the expiry of period of 30 days from the date on which the Finance Act, 2000 received assent of the President, but as noticed above, this is not the fact situation, and therefore, we find, that the learned Tribunal was labouring under basic misconception even from the standpoint, what the Department itself was considering. 27. Likewise, with the enactment of Finance Act, 2000 itself, the respondents could very well have straightway issued demand notice to the assessees, calling them upon to make payment of the amount of credit availed by them immediately, or even within a period of 30 days from the date. In which event the liability of interest could have accrued, but admittedly that has also not been done. 28. Then, apart from the Department's own feeling, or contemplation, or co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, starting point of computation of interest liability, in our view, can possibly not be from the date as held by the learned authorities below. In that regard, we stand sufficiently guided from the judgment of Hon'ble the Supreme Court in Associated Cement Companies Ltd.'s case, wherein after considering the provisions of Section 112(2) (b), Hon'ble the Supreme Court held, that till that date the assessee was having in his favour the order which was holding the field, and the liability of interest is being attracted after the order was set aside, and therefore held, that period of 30 days time to make payment under Section 112(2)(b) is to commence from today. 31. In our view, respecting the letter and spirit of judgment of Hon'ble the Supreme Court, more so in spirit of Article 141, the earliest point of time from which the time for making payment under Section 112(2)(b) can be said to commence is, only from the date the adjudication was made by the order passed in original authority issuing notice. And therefore, we are of the view, that if the payment is not made within a period of 30 days from the date of the order in original, the liability of payment of interest unde....