ORDER
S.L. Peeran, Member (J)
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.
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.
2. 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.
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. 173 G (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 173 G (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 form 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.
3. Learned DR submits that the new provision of calculation of interest would come into force with immediate effect and applies to all duty amounts which have not been paid irrespective of the date of clearance.
4. On a careful consideration, I notice from the above cited judgment that the new provisions of calculation of interest cannot be applied to the clearances effected prior to the date of introduction of new rule. In view of the cited judgments, the calculation of interest of Rs. 1000/- per day is set aside. The appellant is liable to pay interest in terms of the provisions in existence on the date of default. Learned Counsel submits that in terms of the earlier provisions in existence, the interest liability would be Rs 1,40,625/-. He has no objection for adjusting this amounts in the pre-deposit amount of Rs. 2 lakhs. The department shall adjust this amount from the pre-deposit and return the balance amount. The appeal is allowed in the above terms.
(Pronounced and dictated in open court)