TMI Blog2008 (3) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... n without there being adjudication of show cause notice, which are pending decision at the time of commencement of the aforesaid provision?" 2. It may just by the way be mentioned, that in four appeals, being no.6/03, 5/03, 4/03 and 3/03 one additional question is also involved, and framed, being as to whether interest could be levied if at all only uptill 25.10.2000, the date on which the cheque 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the Finance Act, 2000 receives the assent of the President and in the event of non-payment of such credit of duty within this period, in addition to the amount of credit of such duty recoverable, interest at the rate of twenty four per cent, per annum shall be payable, from the date immediately after the expiry of the said period of thirty days till the date of payment. Explanation.- For the removal of 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 Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of penalty was denied, while in some cases disallowing credit of the duty in specified amount, demand of the said amount was confirmed, and the assessee was directed to deposit the amount in the appropriate account, as the case may be. 9. The fact does remain, that the notice initially issued, obviously under Rule 57-I, were carried to logical conclusion, after the decision was rendered by this Court on 3.4.2002, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree months from the date of demand notice, and 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, is also payable, and that, in all the present cases, such notice to show cause had already been served upon them, 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 contende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this only means, that this creates a fiction, that for the purpose of Rule 57-I, it would mean, that the credit on duty of inputs has been taken on account of an error, omission or misconception, and means nothing more. Then, reading sub-section (2) it was contended, that all that it contemplates is, that any action taken, or anything done, or purported to have been taken or done, at any time during the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the assessees did not allow the authorities to proceed to make determination. In that regard various portions of the orders of the authorities below were read to us, to show, that the assessees had taken the stand, that there is a stay from this Court, and therefore, the matter could not be proceeded with. Thus, since the Department was not allowed to proceed, the liability of interest cannot be denied 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that for the present purposes, the non obstante clause is only qua the Rules, and since no benefit was ever drawn, or claimed to be drawn, by the appellant assessee, and therefore, the provisions of Section 112(2)(b) also does not apply. It was also submitted, that during pendency of the writ petitions, the Department never moved for vacating stay, or for expediting hearing, and could have very well 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit thus disallowed. Explanation - Where the service of the notice is stayed by an order of a court of law, the period of such stay shall be excluded from computing the aforesaid period of six months or five years, as the case may be. (2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed off in the manner specified in this section, the manufacturer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 11A, because the scheme of Modvat is covered by the Rules comprising of Modvat Scheme, these provisions lay down complete mechanism and procedure, relevant for the present purposes. We may at this place again revert to the judgment of Hon'ble the Supreme Court, in Associated Cement Companies Ltd.'s case, passed on the review petition. What we find therein is, that in the original order dt. 28.11.2002, which was 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 rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other stand point also viz. that if that were not so, and if the things were as are sought to be contended before us, and as held by the learned Tribunal, that the extent of credit question more or less does not require adjudication by the central excise officers, or that no determination is even envisaged under Section 112(2)(b), or that for making payment, even issuance of communication or an order directing the payment of the credit 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 enac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be so made in accordance with the Rules, being Rule 57-I, the liability of interest starts from the expiry of specified period after the demand notice is served. In this regard, may be, that there is some conflict between the provisions of Section 112(2)(b) and Rule 57-I, but then, for that purpose, we may take the provisions of Section 112(2)(b) to provide a period of 30 days instead of 90 days, as provided in Rule 57-I, but then, 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 Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vires. May be that in that judgment this specific aspect of Section 112(2)(b) may not have been canvassed, but then, the fact remains, that the legislation has been found to be intra-vires, and the fact also does remain, that the judgment dt. 3.4.2002 is already subject matter of appeal before Hon'ble the Supreme Court. Therefore, it is always open to the appellants to raise these contentions before Hon'ble the Supreme Court, if they so stand advised, and if the Hon'ble Supreme Court so permits to the appellants. 34. In our view, in view of the above discussion, the question as framed is required to be answered in the manner, that the learned Tribunal was not right in coming to the conclusion, that under Section 112(2)(b) of the Finance Act, interest can be levied, even where there is no adjudication of the show cause notices, which were pending decision, at the time of commencement of the aforesaid provisions, rather liability of interest can be attracted to commence, from expiry of 30 days from the date of making of determination. 35. In view of the above, the other question about the liability of interest uptill 25.10.2000, or 28.10.2000 need not be gone into by us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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