Full Judgment
But as per the provisions of Section 11AB that existed prior to this date, recovery of interest was very much possible with effect from 28.9.1996 where the short levy or short payment had occurred by reason of fraud, collusion or willful mis-statement etc. The only difference between the provisions of Section 11AB that existed prior to 11.5.2001 and the one introduced with effect from 11.5.2001 is that while the present Section 11AB provides for recovery of interest in all the cases of short payment or erroneous refund, the one existed prior to 11.5.2001 provided for recovery of interest only in respect of the cases where short payment or short levy has been on account of fraud, collusion, etc. In the present case, the elements of fraud, collusion, etc. were present and therefore the Hon'ble CESTAT had upheld the imposition of equal amount of penalty under Section 11AC of the Central Excise Act, 1944. Similarly, as per the provisions of Rule 571(5), where the credit of duty on inputs has been taken wrongly on account of fraud, willful misstatement, collusion, or suppression of facts, etc. with intent to evade payment of duty, the assessee shall also be liable to pay interest. As per Explanation 1 of Rule 571(5), as it stood at the material time, interest will not be charged only if the credit disallowed became payable before 23.7.1996 and in this case it became due after that date. Therefore, the department had rightly sought to recover interest under the provisions of Rule 571(5) of the Central Excise Rules, 1944 read with Section 11AB of the CEA, 1944 as it existed at the material time.
(b) Section 38A of the CEA, 1944 read with Section 132 of the Finance Act, 2001 (14 of 2001) upholds the validity of any action taken under any of the Rules, notifications or order at any time even if the said Rules, Notifications or orders are repealed, amended, rescinded or superseded.
2. I have heard both sides. The reliance placed by the Revenue on the provisions of Section 38A of the Central Excise Act, 1944 read with Section 132 of the Finance Act 2001 is misplaced, in the light of the Tribunal's order in Union Air Products (P) Ltd. v. CCE, Kochi 2006(206)E.L.T. 432. In that case, the Tribunal has held that the intention of the Government expressed in Sub-section 2 of Section 11AB of the Central Excise Act 2001, is to make it inapplicable to the period prior to 11.5.2001 when Section 11AB was substituted. The relevant para of the Tribunal's order is reproduced below: We have gone through the records of the case carefully. The only point at issue is demand of interest under Section 11AB for the period prior to its substitution for the year 2001. We are reproducing the Section 11AB after its substitution in 2001.
Section 11AB. Interest on delayed payment of duty: (1) Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person who is liable to pay the duty as determined under Sub-section (2) or has paid the duty under Sub-section (2B), of Section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and not exceeding thirty six per cent per annum, as is for the time being fixed by the Central Government by notification in the Official Gazette, from the first date of the month succeeding the month in which they duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in Sub-section (2), or Sub-section (2B), or Section 11A till the date of payment of such duty.
Provided that in such cases where the duty becomes payable consequent to issue of an order, instruction or direction by the Board under Section 37B, and such amount of duty payable is voluntarily paid in full, without reserving any right to appeal against such payment at any subsequent stage, within forty five days from the date of issue of such order, instruction or direction, as the case may be, no interest shall be payable and in other cases the interest shall be payable on the whole of the amount, including the amount already paid.
(2) The provisions of Sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President.
What is the purpose of the proviso in the above Section? As per the proviso it is very clear that the provisions of Sub-section (1) of Section 11AB will not be applicable to the period prior to 2001.
Since that is the intention of the Government, Section 6A of the General Clause Act does not save the provisions which were substituted. Hence, the Commissioner's (Appeals) conclusion that the lower authority was empowered to demand interest under the repealed Section 11AB till 10.5.2001 is not correct. We are reproducing the Section 6A of the General Clause Act below: 6A. Repeal of Act making textual amendment in Act or Regulation. - Where any Central Act or Regulation made after the commencement of this Act repeals any enactment by which the text of any Central Act or Regulation was amended by the express omission, insertion or substitution of any matter, then unless a different intention appears, the repeal shall not effect the continuance of any such amendment made by the enactment so repealed and in operation at the time of such repeal.
A careful reading of the above section indicates that unless a different intention appears, the repeal shall not affect the continuance of any such amendment made by any enactment so repealed.
So we have to see the point whether a different intention appears.
In the present case, there is a different intention which is made clear in the proviso. The intention is that the interest on delayed payment of duty would not be applicable to cases prior to the enactment of Finance Bill, 2001. Hence, the old Section 11AB is not saved. Therefore, the contention of the learned Advocate appears to be correct. Hence we allow the appeal by setting aside the demand of interest. As regards penalty, there was no serious challenge by the learned Advocate. Hence the same is upheld.3. The above judgment answers the contention raised by the Revenue in respect of Section 11AB. As for Rule 571(5) the Tribunal's order in the case of Ruby Mills Lts. v. CCE, Raigad 2007(217)E.L.T. 245 in the context of Cenvat/Modvat when the demand was raised prior to 11.5.2001 settles the issue by setting aside the recovery of interest under Section 11AB of the Central Excise Act. The ratio of this judgment would apply with ail fours in the context of Rule 571(5).
4. As the points urged by the Revenue in the ROM application stands settled against them by Tribunal's orders cited supra, there is no merit in the application which is accordingly dismissed.