LAKSHMI CEMENT Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) M/s. Lakshmi Cement have filed this Appeal against Order -in -Appeal No. 564/2003 dated 12.12.2003 by which the Commissioner (Appeals) has confirmed the disallowance of Modvat credit in respect of HSD oil and the demand of interest on the credit amount payable by them.

(2.) Shri K.K. Anand, learned Advocate submitted that the appellants manufacture cement; that they have installed a DG set for captive generation of electricity in their factory premises; that they have availed Modvat credit of the duty paid on HSD oil used as inputs for generation of electricity under Rule 57B of the Central Excise Rules, 1944; that the Inspector Central Excise under letter dated 30.4.97 advised them to reverse the Modvat credit taken by them in respect of duty paid on HSD oil as the same is not admissible; that they have filed writ petition in the High Court of Rajasthan agitating the Modvat credit has been specifically allowed to them on HSD oil under Rule 57B of the Central Excise Rules and the clarification issued by the Chief Commissioner is bad in law; that the High Court of Judicature for Rajasthan in its Order dated 28.8.1997 stayed the operation of impugned Circular and Trade Notice and allowed the Appellants to avail the Modvat credit of duty paid on HSD oil; that the Department issued regular show cause notices alleging wrong availment of Modvat credit during the period from July 1997 to March 2000; that when Rule 57B was amended by Notification No. 5/98 -CE (NT) dated 2.3.98, they also amended their Writ Petition filed in the Rajasthan High Court and the stay already granted was confirmed vide Order dated 20.12.99; that vide Section 112 of the Finance Act, 2000, Parliament validated the recovery of Modvat credit availed on HSD oil during the period from 16.3.95 to 12.5.2000. Learned Advocate further submitted that the appellants are not pressing the Appeal as far as the disallowance of Modvat credit of the duty paid on HSD oil is concerned; that they are challenging the demand of interest from them; that they have paid/reversed the Modvat credit taken by them in respect of HSD oil well within the normal limitation period of three months from the date of confirmation of the demand by the original Authority; that the demand was confirmed by Order -in -Original dated 6.6.2002 and the payment was made by them on 31.7.2002, 9.8.2002 and 13.8.2002; that further there was High Court's Stay Order in their favour allowing them to avail the Modvat credit on HSD oil; that therefore, recovery of interest from 12.5.2000 that is, the date on which Finance Act, 2000 received the ascent of President is not justified and against the spirit of High Court's Stay Order dated 28.8.1997; that there is nothing on record to show that they had delayed the payment/reversal of the Modvat credit. Learned advocate emphasised again that as the show cause notice issued to them denying the Modvat credit has been adjudicated only on 6.6.2002, no interest is chargeable from them with effect from 12.5.2000. He relied upon the decision of the Tribunal in the case of Poddar Pigments Ltd. v. CCE, Jaipur wherein it has been held by the Tribunal that interest is not payable under Section 112(2) of the Finance Act, 2000 when the demand has been made on 4.8.2000 and the credit has been reversed on 28.8.2000.

(3.) Countering the arguments Shri H.C. Verma, learned Departmental Representative submitted that Section 112 of the Finance Act, 2000 contains over -riding provisions for recovery of credit of the duty paid on HSD within 30 days of the day on which the Finance Act, 2000 receives the Presidents' ascent; that Sub -section (2) of Section 112 of the Finance Act, 2000 also contains specific provisions for recovery of interest on payments which are delayed beyond the period of said 30 days. He relied upon the decision in the case of . Maharaja Shree Umaid Mills Ltd. v. CCE, Jaipur Final Order No. A/504 -508/03 -NB(C) dated 1.10.2003 wherein it has been held by the Tribunal that "once it is established that the payment has been delayed beyond the stipulated period of 30 days, interest liability accrues."