ORDER
N.P. Gupta, J.
1. This bunch of appeals involve common question of law, being as under:
Whether in the facts and circumstances of the case, the Tribunal was right in coming to the conclusion that under Section 112(2)(b) of the Finance Act, 2000 interest can be levied even without there being adjudication of show cause notice, which are pending decision at the time of commencement of the aforesaid provision?
2. It may just by the way be mentioned, that in four appeals, being No. 6/03, 5/03, 4/03 and 3/03 one additional question is also involved, and framed, being as to whether interest could be levied if at all only uptill 25.10.2000, the date on which the cheque was presented in the Bank.
3. The facts in all the matters are almost common, except the final product manufactured by the different appellants in different appeals.
4. We think it appropriate to give brief resume of the facts giving rise to the present controversy.
5. On different dates, notices were issued by the competent authority, calling upon the assessees to show cause as to why the amounts mentioned in the notice representing Modvat credit, availed by them on HSD oil, be not recovered, as the Modvat credit is not available to them. It is at this stage, that various petitioners filed writ petitions before this Court, challenging the very jurisdiction of the authority to initiate the proceedings, and for that purpose the assessee relied upon certain judgments of the Tribunal, rendered in the case of India Cements Ltd. v. CC & CE, Hyderabad reported in 1997 (95) ELT-520, and Jindal Polymers v. Commissioner of Central Excise Indore reported in , wherein the 4 learned Tribunal had taken the view, that the Modvat credit is available on the HSD oil to the assessee. In those writ petitions, notices were issued, and interim stay were granted. The writ petitions were filed during the period 1997 to 1999. It was during pendency of these writ petitions, that the Finance Act, 2000 came to be passed, which received the assent of the President on 12.5.2000. Section 112 whereof reads as under:
112. Validation of the denial of credit of duty paid on high speed diesel oil.- (1) Notwithstanding anything contained in any rule of the Central Excise Rules, 1944, no credit of any duty paid on high speed diesel oil at any time during the period commencing on and from the 16th day of March, 1995 and ending with the day, the Finance Act, 2000 receives the assent of the President, shall be deemed to be admissible.
(2) Any action taken or anything done or purported to have been taken or done at any time during the said period under the Central Excise Act or any rules made thereunder to deny the credit of any duty in respect of high speed diesel oil, and also to disallow such credit to be utilised for payment of any kind of duty on any excisable goods shall be deemed to be, and to always have been, for all purposes, as validly and effectively taken or done, as if the provisions of Sub-section (1) had been in force at all material times and, accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority;
(a) no suit or other proceedings shall be maintained or continued in any court, tribunal or other authority for allowing the credit of the duty paid on high speed diesel oil and no enforcement shall be made by any court, tribunal or other authority of any decree or order allowing such credit of duty as if the provisions of Sub-section (1) had been in force at all material times;
(b) 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 non-payment 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.
Explanation.- For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this Section had not come into force.
6. On passing of this Finance Bill, these writ petitions were amended, and the provisions of the Finance Act were challenged being ultravires to the Constitution. Of course, those amendment applications were allowed, and the bunch of the writ petitions was ultimately decided by the Division Bench, vide judgment dt. 3.4.2002, holding the validation Act to be intra-vires, and dismissing the writ petitions, finding no merits therein.
7. It may also be mentioned at this stage, that one matter, being in Commissioner of Central Excise, Hyderabad v. Associated Cement Companies Ltd. Mancherial reported in : 2003(151)ELT12(SC) , came to be decided by Hon'ble the Supreme Court, and therein a view was taken, that the Tribunal was justified in arriving at the conclusion, that the assessee was entitled to get the benefit of notification till Rule 57-B is amended, and the appeal was dismissed. Then, it was held that the assessee was entitled to Modvat credit. However, a review petition was filed, which was allowed, vide judgment dated 8.11.2004, reported in : 2005(180)ELT3(SC) , wherein it was found, that inadvertently attention of the Court was not drawn to provisions of Section 112 of Finance Act, 2000. Then, the provisions were quoted, and it was found, that Sub-section (1) of Section 112 shows, that no credit is admissible on any duty paid on high speed diesel oil at any time during the period commencing on and from the 16.3.1995 and ending with the day the Finance Act, 2000 received the assent of the President, which was given on 1.4.2000. It was noticed, that the period in question comes under the purview of Section 112(1), and it was held, that since the aforesaid provision provides that notwithstanding anything contained in Rules, the credit is not admissible, the assessee was not entitled to get the benefit of Rule 57B. Then in para-5 it was held, that though the assessee is not entitled to the benefit as aforesaid, yet we cannot ignore the fact, that the aforesaid amendment came into force on 1.4.2000, when the order of the tribunal dated 8.9.1999, in favour of the assessee, was holding the field, and it is being set aside today by this order. In this view, the time to make payment under Section 112(2)(b) has to commence only from today. The constitutional validity of Section 112 of the Finance Act was attempted to be raised, but was not permitted in that appeal, and was left open.
8. It is in these facts, that soon after passing of the judgment by this Court on 3.4.2002, the notices issued and the various issues were carried to logical conclusion, obviously in the light of the provisions of Section 112, and it was held, that Modvat credit is not available, and the assessee has wrongly taken the credit, of the specified amount in each case, during the period concerned. Then, in some cases it was found, that the assessee had already deposited the amount, which was ordered to be appropriated to the Government account, and imposition of penalty was denied, while in some cases disallowing credit of the duty in specified amount, demand of the said amount was confirmed, and the assessee was directed to deposit the amount in the appropriate account, as the case may be.
9. The fact does remain, that the notice initially issued, obviously under Rule 57-I, were carried to logical conclusion, after the decision was rendered by this Court on 3.4.2002, obviously because, during the interregnum period there were interim stay by this Court.
10. Then, the orders of the original authority were challenged by the Department in appeal, and the learned Appellate Authority allowed the appeal, and held, that the present appellants are liable to pay interest @ 24% p.a. from 12.6.2000 till the date of payment, in view of the provisions of Section 112. It was also found, that the adjudicating authority issued notice to the assessee, incorporating the liability of interest with the demand in the impugned notice.
11. Appeals against these orders were filed before the learned Tribunal, and the appeals of one of the assessee, being M/s. Maharaja Shree Umaid Mills Ltd. (Appeal No. E/45-48/2003/NB/C and Appeal No. E/263/2003/NB/C did come to be decided by the learned Tribunal vide judgment dt.1.10.2003, holding, that the extent of credit that has been taken or utilised, does not require any determination by the Central Excise Officers, and that, in the instant case no such determination is even envisaged, as Section 112(2)(b) is very categoric in its terms, and 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'. Thus, if any credit of duty paid on HSD had been taken, the same was liable to be recovered, and the 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, and that for making payment also, issuance of a communication, or an order directing the payment of the credit taken, is not a pre-condition. This is the judgment reported in 2003 (158) ELT-734, and is under challenge before us in Appeals Nos. 6/03, 5/03, 4/03 and 3/03. Then, the orders were passed by the learned Tribunal, following the judgment in Maharaja Shree Umaid Mills's case, in other matters also.
12. This is how challenging these orders, all these appeals filed by the appellants are before us, and have been admitted on the substantial questions of law as noticed above.
13. Arguing the appeals it was contended, that the interest is recoverable, or is to be recovered, in addition to the amount of credit, on such duty, and that, the main nonobstante clause is attached to Sub-section (1) only, and Sub-section (2) is not enacted with any such nonobstante clause. Obviously, since the recovery is to be made with interest, till the action for recovery is taken, no liability for interest can be levied. Then, referring to provisions of Section 11A, and Rule 57-I, it was contended, that before effecting any recovery, notice is required to be served to show cause as to why such credit should not be disallowed, and where the credit has already been utilised, the amount to be not utilised by him, and then, determination of amount of which credit is disallowed, is to be made, whereupon assessee is to make payment of the amount equivalent to the credit disallowed, and the payment of such amount determined, is to be made within three months from the date of demand notice, and in addition to the amount so determined, interest, at such rate, as may be fixed by the Central Board of Excise and Customs under Section 11AA of the Act, from the date immediately after the expiry of the said period of three months till the date of payment, is also payable, and that, in all the present cases, such notice to show cause had already been served upon them, at a point of time when the provisions of Section 112 were not on the Statute Book, but then, those notices have to be carried to their logical conclusion, and determination is to be made, demand notice is to be issued, payment can be made within the permissible time period thereafter, and the liability of interest arises only from the date after expiry of such permissible period of time.
14. Referring to the judgment of original authority, in Maharaja Shree Umed Mills's case, it was contended, that in those cases amount was deposited in October, 2000, but the amount could not be appropriated before the adjudication, and it was by the order of the original authority only, that amount has been ordered to be appropriated in Government account. It is also contended, that the Act, or the Rules, does not contain any provision for assessee's entitlement to interest, in case, on adjudication it is found, that any excess amount has been paid by the assessee, obviously therefore, and as a necessary corollary, no liability of interest could be attracted against the assessee also, before adjudication.
15. Then, the next submission made was, that a bare reading of provisions of Section 112, even as they are, obviously because by the judgment dt. 3.4.2002 it has been held to be intra-vires, and may be that the judgment dt. 3.4.2002 is already under appeal before Hon'ble the Supreme Court, and therefore, taking the provisions of Section 112 on the face value, even notwithstanding the incorporation of nonobstante clause, it does not even contemplate absence of any adjudication, much less does it even purport, to do away with the requirement of adjudication. Reliance in this regard was placed on two judgments of the Tribunal, in the cases of Poddar Pigments Ltd. v. Commissioner of Central Excise Jaipur reported in and L.M.L. Ltd. v. Commissioner of Central Excise reported in 2003 (162) E.L.T.-718. It was then submitted, that the validation Act, being Section112, covers only the specified period, from16.3.1995 upto the period ending with the day the Finance Act 2000 received the assent of the President, and the adjudication is necessary, also because, there may be circumstances, like, the assessee may be company which may have gone in liquidation, and assets may have been taken over by the Official Liquidator after the secured creditors may have realised their dues by remaining outside the liquidation, and then the question may arise about the priority of the charge of the Government revenue, even qua the secured creditors, obviously for that purpose, the determination of the amount, and determination of the priority, has to be considered and made, and therefore, making of determination, according to Section 11A, or Rule 57I, is a sine qua non. Then, by reading Section 112 again and again it was contended, that all that is contemplated by Sub-section (1) is, that notwithstanding anything contained in any rule of the Central Excise Rules, 1944, no credit of any duty paid on high speed diesel oil at any time during the relevant period shall be deemed to be admissible. According to learned Counsel, this only means, that this creates a fiction, that for the purpose of Rule 57-I, it would mean, that the credit on duty of inputs has been taken on account of an error, omission or misconception, and means nothing more. Then, reading Sub-section (2) it was contended, that all that it contemplates is, that any action taken, or anything done, or purported to have been taken or done, at any time during the said period under the Central Excise Act or any rules made thereunder, to deny the credit of any duty in respect of high speed diesel oil, and also to disallow such credit to be utilised for payment of any kind of duty on any excisable goods shall be deemed to be, and to always have been, for all purposes, as validly and effectively taken or done, as if the provisions of Sub-section (1) had been in force at all material times, and accordingly, notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, which according to the learned Counsel only means, that if any action has been taken for denying the credit, that is validated, and if any order is passed permitting the credit, still the credit will stand denied obviously, therefore, action is to be taken for recovery of the amount of credit taken, and again, obviously, by taking appropriate proceedings, in accordance with law. Then, submitting on Clause (b), which is precise bone of contention, of Sub-section (2), it was contended, that all that it permits is that, or provides that, 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 times, and then after putting a comma, it is provided, that action is to be taken within 30 days from the date on which the Finance Act receives the assent of the President, and then it provides, that in the event of non-payment of such credit of duty within this period, in addition to the amount of credit of such duty recoverable, interest at the rate of 24% per annum shall be taken. Meaning thereby also, that recovery proceedings are to be initiated, and at best, are to be required to be initiated within 30 days, which may include issuance and service of show cause notice, and determination, and in the event of failure to pay, interest is purported to be payable by the assessee, but this also does not have the effect of taking away the requirement of determination. Thus, taken from any standpoint, it was contended, that the notice of the authorities below, levying interest, despite the amount having been deposited, either before determination, or within the period permitted after determination, cannot attract the liability of interest at all, and to that extent, the orders of learned authority below, including the learned Tribunal, deserve to be set aside.
16. It was contended, that the learned Tribunal in Maharaja Ummaid Mills' case was in error, in proceeding with the assumption, that no determination is envisaged, or that, the extent of credit that has been taken or utilised, does not require any determination, and also, for making payment also, issuance of a communication, or an order, directing the payment of the credit taken, is not a precondition, and since the learned authority below, and the Tribunal, have wrongly ordered the interest to be levied, the orders are liable to be set aside.
17. On the other hand, learned Counsel for the Revenue submitted, that notices have been issued, but in the garb of pendency of the writ petition, the assessees did not allow the authorities to proceed to make determination. In that regard various portions of the orders of the authorities below were read to us, to show, that the assessees had taken the stand, that there is a stay from this Court, and therefore, the matter could not be proceeded with. Thus, since the Department was not allowed to proceed, the liability of interest cannot be denied or contested. Then, relying upon the judgment of Hon'ble the Supreme Court, in Collector of Central Excise v. Raghuvar (India) Ltd. reported in : 2000ECR414(SC) , it was contended, that action for recovery under Section 57-I, as it stood prior to16.10.1988, is not subject to the limitation period provided under Section 11A of the Central Excise Act, and that, even if Section 11A is taken to be containing provisions of general nature, the provisions of Modvat Scheme are special ones, and the latter would therefore govern the scheme. Learned Counsel means, that in the present case, the provisions of Rule 57-I, being a special provision regarding Modvat Scheme, the general provisions of Central Excise Act, contained in Section 11A, need not be gone into. Then, it was contended that from the reading of provisions of Section 112(2)(b), and comprehending the matter under the scheme of things, it is clear, that the contemplated adjudication has to be only qua making arithmetical calculation, but then per force the provisions of Section 112(2)(b), the liability of interest would start from the beginning, i.e. on expiry of 30 days from the date of receipt of assent of the President to the Finance Act 2000. It was also contended, that under the scheme of things, by virtue of Section 112, availability of Modvat credit stood completely denied, notwithstanding any judgment or order of any court or tribunal, or any provision in the Rules, and where such credit has been availed, it was directed to be recovered, and at the same time, it is provided, that in the event of non-payment of such credit of duty, within the said period of 30 days, in addition to the amount of credit of such duty recoverable, 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. Thus, since the Modvat credit availed by the assessee is not in controversy, may be that the Department was to recover, but then, in order to avoid liability of interest, the payment was required to be made by the assessee within a period of 30 days of the Finance Act, 2000 receiving the assent of the President, otherwise liability of interest is attracted, from the expiry of said 30 days.
18. In rejoinder, learned Counsels for the petitioners submitted, that the more important question is, as to whether in the circumstances of the case, Section 112 at all applies, inasmuch as the present are not the cases where either any action has been taken to deny the credit on any duty, nor there is any judgment or decree rendered by any court or tribunal, denying, or permitting, such credit, which may be required to be validated or invalidated by Section 112, rather notices have been issued under Rule 57-I, and until and unless determination was made, consequent upon those notices, after hearing the assessees, it could not be said, that any amount had accrued, and since Section 112(2)(b) contemplates an additional liability of interest, in addition to the amount of credit of such duty recoverable, until and unless that amount is determined, no liability of interest can be attracted. Then, it was also contended that for the present purposes, the nonobstante clause is only qua the Rules, and since no benefit was ever drawn, or claimed to be drawn, by the appellant assessee, and therefore, the provisions of Section 112(2)(b) also does not apply. It was also submitted, that during pendency of the writ petitions, the Department never moved for vacating stay, or for expediting hearing, and could have very well adjudicated, consequent upon the notice. It was also contended, that Section 112(2)(b) is not in the nature of any levy, or impose liability, rather is in the nature of concession for the assessee, who has been allowed or disallowed the credit, and thus the demand of interest is bad.
19. Learned Counsel for the appellants invited our attention to certain provisions of Central Excise Rules, Central Excise Act, so also other fiscal statutes, to show, that where the liability of interest was intended to be attracted, from any date anterior to the date of determination of the amount, specific provision in that regard has been made, and circumstances for attracting such retrospective liability has been provided, while where such retrospective liability is not contemplated, the provision has been made for payment within the specified time of the raising of demand, and then liability of interest is attracted, and from this, it was contended, that even from a collective reading of Rule 57I and Section 112(2)(b), it is clear, that the liability of interest is not attracted from any retrospective date. It is maintained rather reiterated, that it is only Sub-section (1) which is couched with nonobstante clause, while Sub-section (2) is not so couched, with the result, that Rule 57-I does have its full play.
20. We have considered the submissions, and have gone through the records, and various provisions of law.
21. Before starting with the discussion, we may gainfully quote the provisions of Rule 57-I, which reads as under:
57-I. Recovery of credit wrongly availed of or utilised in an irregular manner;-(1)(i) Where credit of duty paid on inputs has been taken on account of an error, omission or mis-construction, on the part of an officer or a manufacturer, or an assessee, the proper officer may, within six months from the date of filing the return as required to be submitted in terms of Sub-rule (8) of Rule 57G, and where no such return as aforesaid is filed, within six months from the last date on which such return is to be filed under the said rule, serve notice on the manufacturer or the assessee who has taken such credit requiring him to show cause why he should not be disallowed such credit and where the credit has already been utilised, why the amount equivalent to such credit should not be recovered from him.
(ii) Where a manufacturer has taken the credit by reason of fraud, willful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the provisions of Clause (i) shall have effect as if for the words 'six months', the words 'five years' were substituted.
(iii) The proper officer, after considering the representation, if any, made by the manufacturer or the assessee on whom notice is served under Clause (i), shall determine the amount of such credit to be disallowed (not being in excess of the amount specified in the show cause notice) and thereupon such manufacturer or assessee shall pay the amount equivalent to the credit disallowed, if the credit has been utilised, or shall not utilise the credit thus disallowed.
Explanation - Where the service of the notice is stayed by an order of a court of law, the period of such stay shall be excluded from computing the aforesaid period of six months or five years, as the case may be. (2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed off in the manner specified in this section, the manufacturer shall, upon a written demand being made by the [Assistant Commissioner of Central Excise], pay the duty leviable on such inputs within three months from the date of receipt of the notice of demand.
(3) Where a manufacturer or an assessee fails to pay the amount determined under Sub-rule (1) or Sub-rule (2) within three months from the date of receipt of demand notice, he shall pay, in addition to the amount so determined, interest at such rate, as may be fixed, by the Central Board of Excise and Customs under Section 11AA of the Act, from the date immediately after the expiry of the said period of three months till the date of payment.
(4) Where the credit of duty paid on inputs has been taken wrongly by reason of fraud, wilful mis-statement, collusion or suppression of facts, or contravention of any of the provisions of the Act, or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed as determined under Clause (iii) of Sub-rule (1) shall also be liable to pay a penalty equal to the credit so disallowed.
Explanation I - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the penalty shall be payable on such reduced amount of credit disallowed.
Explanation II - Where the credit disallowed is increased or further increased by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the penalty shall be payable on such increased or further increased amount of credit disallowed.
(5) Notwithstanding anything contained in Clause (iii) of Sub-rule (1) or Sub-rule (3) where the credit of duty paid on inputs has been taken wrongly on account of fraud, willful mis-statement, collusion, or suppression of facts, or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty, the person who is liable to pay the amount equivalent to the credit disallowed, as determined under Clause (iii) of Sub-rule (1), shall also be liable to pay interest at such rate as may be fixed by the Board under Section 11AA of the Act from the first day of the month succeeding the month in which the credit was wrongly taken, till the date of payment of such amount.
Explanation I - For the removal of doubts, it is hereby declared that the provisions of this Sub-rule shall not apply to cases where the credit disallowed became payable before the 23rd day of July, 1996.
Explanation II - Where the credit disallowed is reduced by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the interest shall be payable on such reduced amount of credit disallowed.
Explanation III - Where the credit disallowed is increased, or further increased, by the Commissioner of Central Excise (Appeals), the Appellate Tribunal or, as the case may be, a court of law, the interest shall be payable on such increased, or further increased, amount of credit disallowed.
22. We need not go into the provisions of Section 11A, because the scheme of Modvat is covered by the Rules comprising of Modvat Scheme, these provisions lay down complete mechanism and procedure, relevant for the present purposes. We may at this place again revert to the judgment of Hon'ble the Supreme Court, in Associated Cement Companies Ltd.'s case, passed on the review petition. What we find therein is, that in the original order dt. 28.11.2002, which was passed after commencement of the Finance Act of 2000, the Modvat credit was held to be available, and then, when attention was invited to Section 112 of the Finance Act, it was held, that credit is not available, and then in para-5, it has been held as under:
5. Though the assessee is not entitled to the benefit as aforesaid, yet we cannot ignore the fact that the aforesaid amendment came into force on 1st April, 2000 when the order of the tribunal dated 8th September, 1999, in favour of the assessee was holding the field and it is being set aside today by this order. In this view, the time to make payment under Section 112(2)(b) has to commence only from today.
23. We seek sufficient guidance from this judgment, inasmuch as at least till rendering of this judgment by this Court on 3.4.2002, the present assessees/appellants were having judgment of the Tribunal in India Cement's case, and Jindal Polymers's case, and the judgment of the Tribunal in Associated Cement Companies Ltd.'s case as well in their favour, and as such the appellant can be said to have stood well advised in challenging the contemplated action of the Department, by filing litigations.
24. It always rests in the realm of uncertainty as to whether the stand taken by the person approaching the Court would be accepted by the court, or not, but the fact does remain, that the above circumstances do show, that it cannot be said, that the assessees had simply initiated litigation before this Court to only stall the action of the Department, rather they earnestly and bonafidely believed, that they are entitled to avail the credit. It appears, that finding prima facie force in the stand of the assessee, this Court granted interim orders. It is also significant to note, that it was during pendency of those writ petitions, that probably in view of the judgments rendered by the learned Tribunals in different cases, that the Finance Act, 2000 was enacted, incorporating Section 112, to validate the denial of credit, but then, the constitutional validity of that section was challenged before this Court by making appropriate amendment, with appropriate leave of the Court, and thus the matter did remain pending before this Court, obviously therefore, till the constitutional validity of the legislation was upheld by this Court, no fault can be found with the assessees, in not paying the amount of credit availed by them. May be, in view of good sense prevailing on the authorities of the Department, or may be rightly respecting the interim orders of this Court passed in different writ petitions, the authorities did not proceed with the making adjudication of the demand, consequent upon the notice issued under Rule 57I, but then the fact does remain, that the notices were kept alive, and it was only after the judgment was rendered by this Court on 3.4.2002, that the proceedings were proceeded ahead, and orders of adjudication were made. Thus, this does show that even the respondents within themselves were of the view, all through, that for raising a demand under Section 257-I is a sine qua non.
25. We may examine the matter from other stand point also viz. that if that were not so, and if the things were as are sought to be contended before us, and as held by the learned Tribunal, that the extent of credit question more or less does not require adjudication by the central excise officers, or that no determination is even envisaged under Section 112(2)(b), or that for making payment, even issuance of communication or an order directing the payment of the credit taken is not a pre-condition, then at least the Department would have given up the notice originally issued under Rule 57-I, and would have straightway addressed communication to the assessees, at least immediately after the judgment was rendered by this Court on 3.4.2002, calling them upon to make payment of the credit availed, immediately, and then probably might have laid claim for interest after the expiry of period of 30 days from the date on which the Finance Act, 2000 received assent of the President, but as noticed above, this is not the fact situation, and therefore, we find, that the learned Tribunal was labouring under basic misconception even from the standpoint, what the Department itself was considering.
26. Likewise, with the enactment of Finance Act, 2000 itself, the respondents could very well have straightway issued demand notice to the assessees, calling them upon to make payment of the amount of credit availed by them immediately, or even within a period of 30 days from the date. In which event the liability of interest could have accrued, but admittedly that has also not been done.
27. Then, apart from the Department's own feeling, or contemplation, or considerations, in our view also, even a reading of the provisions of Section 112 does show, that according to Sub-section (1), by nonobstante clause, it only provides for disallowance of credit. Then, Sub-section (2) only validates the action taken to deny the credit, and invalidates any action taken or order passed allowing the credit, and then Clause (b) of Sub-section (2) only directs that recovery shall be made of all the credit of duty, and significantly, this clause, in any case, does not proceed with any nonobstante clause like 'notwithstanding anything contained in the Central Excise Act, or the Central Excise Rules, 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'. If that were the language of Clause (b), probably it could be canvassed, that in view of the nonobstante clause even the requirement of Rule 57-I, or for that matter even of 26 Section 11A are not attracted.
28. Then, even if the two provisions being Section 112 (2)(b) and Rule 57-I are read together, we do not find even any conflict to be there in between the two provisions, to accept the contention of the Revenue, that there being a conflict, the provisions of Finance Act, being basic statute, and provisions of Rule 57-I being of subordinate legislation, the provisions of Section 112 would prevail. In our view, Section 112(2)(b) only permits that recovery shall be made. Then, it does neither lay down any mechanism for effecting recovery, nor does it eliminate the invoking the mechanism existing under the Rules for effecting recovery. Obviously therefore, the two provisions have to be read together, and to be construed harmoniously, and the obvious result would be, that the recovery is to be effected in accordance with the provisions of the Rules.
29. If the recovery is to be so made in accordance with the Rules, being Rule 57-I, the liability of interest starts from the expiry of specified period after the demand notice is served. In this regard, may be, that there is some conflict between the provisions of Section 112(2)(b) and Rule 57-I, but then, for that purpose, we may take the provisions of Section 112(2)(b) to provide a period of30 days instead of 90 days, as provided in Rule 57-I, but then, starting point of computation of interest liability, in our view, can possibly not be from the date as held by the learned authorities below. In that regard, we stand sufficiently guided from the judgment of Hon'ble the Supreme Court in Associated Cement Companies Ltd.'s case, wherein after considering the provisions of Section 112(2)(b), Hon'ble the Supreme Court held, that till that date the assessee was having in his favour the order which was holding the field, and the liability of interest is being attracted after the order was set aside, and therefore held, that period of 30 days time to make payment under Section 112(2)(b) is to commence from today.
30. In our view, respecting the letter and spirit of judgment of Hon'ble the Supreme Court, more so in spirit of Article 141, the earliest point of time from which the time for making payment under Section 112(2)(b) can be said to commence is, only from the date the adjudication was made by the order passed in original authority issuing notice. And therefore, we are of the view, that if the payment is not made within a period of 30 days from the date of the order in original, the liability of payment of interest under Section 112(2)(b) would arise from the date of expiry of 30 days from the date of order in original, and liability cannot be attracted from any anterior point of time.
31. It is also significant to note, that the order of 28 the original authority is dated 29.4.2002, by order dt. 19.2.2003 the Commissioner had exercised his powers under Section 35E(2), and had directed the Assistant Commissioner to file appeals before the Commissioner for challenging the order in original, and lay claim for interest. It is during this interregnum period, that as noticed above, the appeal filed by the commissioner in Associated Cement's case was dismissed by Hon'ble the Supreme Court on 28.11.2002, upholding entitlement to Modvat credit, and against that order review petition was filed in the year 2003, which was allowed on 8.12.2004. This does indicate, that till passing of the order dt. 28.11.2002, or in any case till passing of the judgment by this Court dt. 3.4.2002, the Department was also not of the view, that these consequences have to flow, attracting leviability of interest, to commence since the expiry of 30 days from the date of Finance Act, 2000 receiving assent of the President. It is an afterthought stage, that on a second thought, the controversy has been triggered off. Though this may not be a sole or even material ground for negativing the claim of interest by the revenue, however this is being mentioned, only as a fact throwing some light on the fact situation.
32. Much was sought to be argued on the aspect of provisions of Section 112(2)(b) being a colourable exercise of power on the part of the Department, and having been enacted with a view to penalise the appellants, who had availed their fundamental right of constitutional remedies, by approaching this Court. But then, in our view, we are not inclined to entertain the submission at this stage, because vide judgment dt. 3.4.2002 the enactment has been found to be intra-vires. May be that in that judgment this specific aspect of Section 112(2)(b) may not have been canvassed, but then, the fact remains, that the legislation has been found to be intra-vires, and the fact also does remain, that the judgment dt. 3.4.2002 is already subject matter of appeal before Hon'ble the Supreme Court. Therefore, it is always open to the appellants to raise these contentions before Hon'ble the Supreme Court, if they so stand advised, and if the Hon'ble Supreme Court so permits to the appellants.
33. In our view, in view of the above discussion, the question as framed is required to be answered in the manner, that the learned Tribunal was not right in coming to the conclusion, that under Section 112(2)(b) of the Finance Act, interest can be levied, even where there is no adjudication of the show cause notices, which were pending decision, at the time of commencement of the aforesaid provisions, rather liability of interest can be attracted to commence, from expiry of 30 days from the date of making of determination.
34. In view of the above, the other question about the 30 liability of interest uptill 25.10.2000, or 28.10.2000 need not be gone into by us.
35. The appeals are accordingly allowed in the manner that no liability of interest will be attracted on the amount of Modvat credit availed, before expiry of 30 days from the date of determination, made by the order in original, passed pursuant to the notice given by the authorities concerned, under Rule 57-I.