1. Facts of the case in the two appeals are somewhat similar and hence, we are disposing of the two appeals together.
3. The appellants are challenging the recovery of interest, which has been ordered to be recovered from them, in terms of order passed by the lower authorities. The facts of the case are that the appellants have taken Modvat credit in respect of HSD oil used in the factory. In terms of the order-in-original passed by the Assistant Commissioner, the credit amount was denied to them and recovery of appropriate interest was also ordered. The said recovery was ordered in terms of provisions contained in Section 112(2) of the Finance Act, 2000. The said Section 112(2) was incorporated in the Finance Act to validate the denial of credit of duty paid on High Speed Diesel oil and also to disallow such credit to be utilised for payment of any kind of duty on any excisable goods from 16-3-1995 till 12-5-2000 (date of President's Assent to Finance Act, 2000). The appellants had taken the credit of duty paid in respect of HSD oil prior to enactment of the Finance Act, 2000. The credit could not be denied to them on account of absence of legal backing to support such denial. However, the denial has been sanctified through Section 112(2) of the Finance Act, 2000. Sub-section (2) (b) of Section 112 also provided that, in case the payment of credit of duty taken or utilised is not made within 30 days from the date of enactment of the Finance Act, 2000, then in addition to the recovery of credit, interest at the rate of 24% per annum shall be payable from the date immediately after the expiry of the said period of 30 days till the date of payment.
4. The appellants are pleading that, in this case the requirement of interest payment starts after the expiry of 30 days from the date of confirmation of the demand. It is their submission that, even though the Finance Act, 2000 received the assent of the President on 12-5-2000, their liability was determined at a much later date through completion of adjudication proceedings. According to appellants the interest liability gets attracted after the expiry of 30 days from the date of respective order in original. The appellants having made the required payments before expiry of the 30 days from the respective dates of order-in-original, they are not liable to pay any interest as demanded in the impugned orders.
5. The issue to be decided falls under a narrow compass. We have perused the provisions of Section 112 of the Finance Act, 2000, where Sub-section (b) of Section 112(2) categorically states as under :- "Recovery shall be made of all the credit of duty, which have been taken or utilised but which would not have been allowed to be taken or utilised; if the provisions of Sub-section (1) had been in force at all material times, within a period of thirty days from the date on which the Finance Act, 2000 receives the assent of the President and in the event of nonpayment of such credit of duty within this period, in addition to the amount of credit of such duty recoverable, interest at the rate of twenty-four per cent per annum shall be payable, from the date immediately after the expiry of the said period of thirty days till the date of payment." 6. The ld. Advocate has pleaded that unless and until the show cause notice is issued and the same is adjudicated to quantify the amount of credit of duty, the recovery proceedings cannot commence under the said Sub-section (2) (b) of Section 112 of the Finance Act, 2000. It is pleaded that, recovery refers to collection only. No collection can be possible unless there is an assessment and the assessment can follow only through an adjudication proceedings. It is, therefore, claimed that in the event where the payments are made within 30 days from the date of completion of adjudication, there is no interest liability. The ld. DR counters this argument and reiterates the recovery for interest as ordered in the impugned orders.
7. In this connection, we note that, the extent of credit that has been taken or utilised does not require any determination by the Central Excise Officers. The information is available in the appellants' own records. In the instant appeals there is not even a whisper that the amounts of inadmissible credits figuring in the respective orders are inaccurate. The consequences of non-payment of credit of duty taken/utilised, within the stipulated period, are spelt out in subsection (b) of Section 112(2). Therefore, it was incumbent on the part of the appellants to make suo motu payment of Modvat credit taken on the HSD oil within the stipulated period. Having not done so, they had incurred the interest liability as provided under Section 112(2)(b).
8. The learned Counsel vehemently pleaded that, validation provisions, though authorise retrospective denial of credit, the process of recovery has to follow the limitations laid down by Section 11A of the Central Excise Act, and the rules made thereunder. Referring to the retrospective amendments introduced in respect of Rules 9 and 49 it was pleaded that, in terms of Supreme Court's judgment in J.K. Spinning and Weaving Mills Ltd. and Anr. v. Union of India reported in 1987 (32) E.L.T. 234 (S.C.), retrospective levy has to be bound by limitations under Section 11A. Conversely it is pleaded that unless proceedings are initiated in terms of provisions contained in Section 11A and concluded in a confirmed demand, there can be no recovery. For making any recovery an assessment is a must. In other words, the learned Counsel submits that unless and until the ineligible amount is quantified through a process of assessment, the liability to pay interest does not accrue for the period prior to such assessment. He cited the judgment of the Supreme Court in J.K. Synthetics v. Commercial Tax Officer (CA Nos. 3414 to 3416 of 1982) 1994 (94) STC 422, and few other citations.
We have gone through the respective citations. In those cases payment of interest was demanded on the differential of sales tax paid at the time of filing return and that determined through final assessment. The Hon'ble Court held that the payment of interest is not demandable from the date of return. The facts in this case are not identical. While in the sales tax cases, a final determination of tax amount was necessary in terms of the sales tax provisions, in the instant case no such determination is even envisaged. Section 112(2)(b) is very categoric in its terms. It says "recovery shall be made of all the credit which have been taken or utilised but which would not have been allowed to be taken or utilised, if the provisions of Sub-section (1) had been in force at all material times." From the above, it is quite clear that, if any, credit of duty paid on HSD had been taken, the same was liable to be recovered, (emphasis supplied).
The aforesaid provision contains a clear mandate to the persons who have taken such credit to make payment as well as to the departmental authorities to effect recoveries. It is not as if the recovery action is stalled, till the expiry of 30 days from the date of assent.
Similarly for making payment also, issue of a communication or an order directing the payment of the credit taken is not a precondition. In case, if the logic advanced by the ld. Counsel, was to be accepted, despite the clear mandate provided, in Section 112(2)(b), no recoveries of credit can be possible in cases where either the show cause notice has not been issued or adjudicated. Such an interpretation would be contrary to the overriding provisions contained in Section 112(2)(a) which amongst other things even, prohibits allowing of credit through an order of a Court or any other authority. Therefore, we hold that, it was legally incumbent on the appellants to pay back the credit without waiting for confirmation of demand. Having delayed the payment, interest is attracted. Therefore we hold that, once it is established that the payment has been delayed beyond the stipulated period of 30 days, interest liability accrues.
9. We accordingly hold that, the interest amount has been correctly demanded and the appeals deserve to be rejected.