VISHNU TEXTILES LTD. Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) THIS appeal arises from OIA. No. 324/05 dated 9.12.05 by which the Commissioner has confirmed the calculation of interest in respect of defaulted duty amount. The defaulted duty amount pertains to clearances up to 31.3.03. The provision pertaining to calculation of interest at Rs. 1000/ - per day was introduced on 1.4.03 in terms of Rule 8(3) of CE rules through Notification No 12/03 CENT dated 1.3.03. The revenue has proceeded to calculate the interest on the defaulted amounts at Rs. 1000/ - per day in terms of the cited rulings. This is contested by the appellants. The appellants contention is that the new provisions pertaining to calculation of interest cannot be applied to defaulted clearances prior to the date of introduction of calculation of interest at Rs. 1000/ - per day. Learned Counsel submits that their submission is supported by the judgment in the case of Narmada Chematur Petrochemicals Ltd. v. CCE Vadodara 2004 (178) ELT 929 wherein it has been held that new provision of interest cannot be applied to clearance affected prior to the date of introduction of new rate of duty. The para 3 of the judgment is reproduced herein below.

(2.) WE see force in the contention of the asses see that the duty became payable on 5.4.2001. The expression "duty became payable" occurring in Section 11AB cannot be stretched upon to the point of time when the duty which remained payable, was actually paid, for the reason that it is not the actual payment that is relevant to determine whether the interest can be charged but on the date the duty became payable or ought to have been paid. Our views find support from the Tribunal's order in the case of Modern Insulators v. CCE Jaipur 2004 (176) ELT 144 (Tri) : 2004 (60) RLT 632, wherein it was held that interest in terms of Section 11AB is not leviable in respect of the demand for the period prior to 11.5.2001 as there was no fraud/collusion suppression of facts etc., on the part of the appellants. In that case, the duty was payable for the period from March 2001 to December 2001 and the Tribunal held that the appellants were liable to pay interest under Section 11AB only in respect of duty which became payable from 11.5.2001 onwards even though the appellants paid the duty only after December 2001 i.e. only after 11.5.2001 when Section 11AB was amended The same view was taken in the case of Man Structural Ltd. v. CCE Jaipur . Following the ratio of the above orders which are applicable on all fours to the facts of the present case we hold that interest is not chargeable, set aside the impugned order and allow the appeal.

(3.) THE apex court in the case of CCE v. Elgi Equipments has also held that Section 11AC of CE Act cannot be given retrospective effect to past clearances. The Rajasthan High Court in the case of Lucid Colloids Ltd. v. UOI has held that interest of Rs. 1000/ - per day is ultravires to Section 11AB. This bench in the case of Hindustan Coco -cola beverages Pvt. Ltd. v. CCE has also held that subsequent introduction of provision of interest cannot be applied to clearances made prior to that date. The finding recorded in para 5 is reproduced herein below.