ORDER
T.K. Jayaraman, Member (T)
1. This is an appeal against OIA No. 73/2003-C.E., dated 21-7-2003 passed by the Commissioner of Central Excise (Appeals) II Bangalore. The short point is whether interest is payable on the differential duty due from the appellants for the period from April 1999 to March 2000 even though the duty was paid after 1-4-2000 in terms of Rule 173G(1)(d) which was introduced with effect from 1-4-2000. The interest Clause 173G(1)(d) was introduced only with effect from 1-4-2000. According to the appellant, it cannot have retrospective effect. In other words no interest can be demanded on the outstanding amount which were leviable from them prior to 1-4-2000. Original authority and the first appellate authority held a different view. The Commissioner (Appeals) in the impugned older observed as follows :
“Rule 173G of Central Excise Rules, 1944 stipulates the procedure to be followed by the assessee in regard to payment of duty. There is an interest clause in the Rule which says that if the manufacturer fails to pay the duty payable by the due date, he shall be liable to pay the outstanding amount along with interest. In the instant case as of the date on which the interest clause was introduced, there was an outstanding amount which was not paid on the dates on which it ought to have been paid. Therefore, the interest starts accruing from the date on which the interest clause was brought in on the outstanding amount till the date on which it is actually paid. In view of this it cannot be said that the interest was charged retrospectively, it was charged only prospectively on the outstanding amount i.e. from 1-4-2000 to various dates on which the differential duty has been paid.”
The appellants strongly challenged the findings of the Commissioner (Appeals).
2. Shri V. Raghavan learned advocate appeared for the appellants and Shri R. Ramakrishnappa learned JDR appeared for the department.
3. Learned advocate urged that the appellants are required to pay only Rs. 43,774.75/- being the interest for the period from April 2000 to December 2000 and not Rs. 1,13,242/- as there was no provision for the levy of interest on delayed payment of duty prior to 1-4-2000. He relied on Board Circular 655/46/2002-C.E., dated 26-6-2002 on issued in connection with Section 11AB. Section 11AB was introduced on 28-9-1996. The Board clarified that Section 11 AB can be invoked only respect of clearances effected after 28-9-1996-irrespective of the date of passing of the adjudication order. In coming to such a conclusion, the board placed reliance on the decision in M/s. M.P. Tapes [1998 (103) E.L.T. 128 (T)] wherein it was held that with regard to imposition of penal interest under Section 11AB, the interest on delayed payment of duty cannot be imposed when duty is short paid for a period prior to incorporation of penalty provision of Section 11AB of the Central Excise Act, 1944. The ratio of the above decision, the advocate contended is clearly applicable to the present case. He also relied on the decision of the Supreme Court in the case of Mithilesh Kumari v. Prem Behari Khare [1989 (40) E.L.T. 257] wherein it was held that before applying a statute retrospectively the court has to be satisfied that the statute is infact retrospective. The presumption against retrospective operation is strong in cases in which statute if operated retrospectively would prejudicially affect vested rights or illegality of the past transactions or impair contracts, or impose new duty or attach new disability in respect of past transaction or consideration already passed.
4. Learned JDR reiterated the contention in the OIA.
5. I have carefully considered the submissions made by the appellants and the revenue. The issue is simple. The interest Clause 173G (1)(d) was introduced only with effect from 1st April 2000. 173G(1)(d) reads as follows.
“If the manufacturer fails to pay the amount of duty payable by the due date, he shall be liable to pay the outstanding amount along with interest at the rate of twenty-four per cent per annum on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of outstanding amount.”
The above provision speaks of the due date which is defined in 173G(1)(a)(i), (ii) and (iii). When the fortnightly payment of duty was introduced in respect of clearances for the first fortnight, the duty was required to be paid by 20th of the month and for the clearances in the second fortnight other than the month of March, the duty was required to be paid by the 5th of succeeding month. Since these provisions themselves were introduced only with effect from 1-4-2000, they cannot be applied to clearances prior to 1-4-2000 hence the OIA does not appear to be correct. Case laws cited by the learned advocate and also the Board’s clarification in respect of 11AB are squarely applicable to the present case. Hence I allow the appeal with consequential relief.