BHARAT HEAVY ELECTRICALS LTD. Vs. CCE

JUDGEMENT

(1.) The appeal filed by M/s Bharat Heavy Electricals Limited, a Public Sector Undertaking, is against a demand of interest on duty for the period 20.3.2001 to 21.4.2001 was also against a penalty of Rs. 50,000 imposed on them by the Commissioner of Central Excise.

(2.) Examined the records and heard both the sides. The Counsel has given a brief account of the relevant facts. The appellants had cleared excisable goods manufactured by them to the West Bengal State Electricity Board without payment of duty during the aforesaid period, claiming exemption under Notification No. 108/95 -CE dated 28.8.95. On this aspect, much correspondence took place between the appellants and the Department. Ultimately, a show -cause notice was issued to them by the Department on 2.4.2002 demanding duty on the aforesaid goods under Section 11 -A of the Central Excise Act with interest thereon under Section 11 -AB of the Act as also proposing to impose penalty on the party under Rule 173 -Q of the Central Excise Rules, 1944 and Rule 25 of the Central Excise (No. 2) Rules, 2001. The demand of duty and other proposals were contested. However, the appellants paid the entire amount of duty. The only issues which subsisted for adjudication were whether the appellants were liable to pay interest under Section 11 -AB on the amount of duty paid for the period 20.3.2001 to 21.4.2001 and whether any penalty was liable to be imposed on them. In adjudication of these issues, the Commissioner ordered recovery of interest under Section 11 -AB from the party and imposed on them a penalty of Rs. 50,000 under Rule 173 -Q. Hence, the present appeal. The Counsel further submits that the adjudicating authority has wrongly invoked the amended provisions of Section 11 -AB to charge interest on the amount of duty paid for the aforesaid period. During the said period, Section 11 -AB had provided for levy of interest on any amount of Central Excise duty not paid or short paid on account of fraud, collusion, suppression of facts or wilful mis -statement of facts, with intent to evade payment of duty. The Section was amended w.e.f. 11.5.2001 only so as to enable the Department to levy interest on any amount of duty which has remained unpaid whether or not any of the above elements was involved in the non -payment of duty. Counsel submits, this amendment had no retrospective effect.

(3.) I have to accept the argument of the Counsel inasmuch as there is nothing in the amended Section 11 -AB to indicate that the amendment had any retrospective effect. Under the unamended Section 11 -AB, interest could be levied on duty of excise only on the ground of fraud, collusion, suppression or mis -statement which were sine qua non for such levy. None of these pre -conditions was alleged in the relevant show -cause notice, nor found by the adjudicating authority. Therefore, the levy of interest under Section 11 -AB on the amount of duty paid for the period 20th March to 21st April, 2001 is illegal.