UNION OF INDIA & ORS.versusMAHARAJA SHREE UMAID MILLS

                   [2013] 17 S.C.R. 271


                 UNION OF INDIA & ORS.                            A
                            v.
            MAHARAJA SHREE UMAID MILLS
             (Civil Appeal No. 5634 of 2008)
                   DECEMBER.17, 2013
                                                                  B
         [ANIL R. DAVE AND DIPAK MISRA, JJ.]

     MODVAT- Finance Act, 2000- s.112 - Central Excise
Rules, 1944 7 rr. 57(1), 57A, 578 - Respondent-assessee
availed MODVAT credit on HSD oil used as an input though          C
it was not permissible - Amount wrongly availed by
respondents by way of MODVAT credit recovered by the
Revenue with i.nterest thereon - Recovery of wrongfully
availed MODVAT credit with interest - Justification - Held:
By virtue of s. 112 of the _2000 Act, if anybody had wrongfully   D
availed MODVA T credit on the HSD oil used as an input, it
was to return such amount within 30 days and in case the
amount was not refunded within 30 days, the amount had to
be returned with interest at the rate of 24% p.a. - On facts,
the respondent-assessee did not return the wrongfully availed     E
MODVAT credit even within 30 days, and thus, was required
to return the same with interest at the rate of 24% p.a. - Such
 a course, adopted by the Revenue for recovery of the amount
 was legitimate - Central Excise Tariff Act, 1985 - Chapters
 52, 54 & 55 of the Schedule.
                                                                  F
     The respondent-assessee is a manufacturer of yarn
and fabrics, which are covered under Chapters 52, 54 &
55 of the Schedule to the Central Excise Tariff Act, 1985.
In the process of the manufacture of yarn and fabrics, the
responclent-assessee uses High Speed Diesel Oil ('HSD             G
Oil') as fuel for generation of electricity i.e. power, with
which manufacturing unit of the respondent is operated.
As the HSD oil is being used as an input in the process
of generation of electricity so as to manufacture the final
                             271                                  H
    272    SUPREME COURT REPORTS            [2013] 17 S.C.R.


A produce i.e. yarn and fabrics, the respondent was
  claiming the MODVAT credit of the duty paid on the HSD
  oil used as an input under the provisions of Rules 57A
  and 578 of the Central Excise Rules, 1944.

       The Central Government issued a Notification on
8
  16th March, 1995 whereby MODVAT credit of the duty
  paid on the HSD Oil as an input, was withdrawn.
  Subsequently, the Commissioner of the Central Excise
  also issued a Trade Notice on 7.4.1997 to the effect that
  no MODVAT Credit in respect of the duty paid on the HSD
C oil used as an input would be available under Rule 57A
  and 578 of the Rules.

       The respondent as well as other assessees-
  respondents had availed the MODVAT credit of the duty
D paid on the HSD Oil, which was used as an input even
  though it was not permissible in view of the aforestated
  Notification followed by the Trade Notice. In the
  aforestated circumstances, show cause notices had been
  issued to all the respondents calling upon them as to
E why the MODVAT credit availed by them during the
  period for which they were not entitled to such a credit,·
  should not be withdrawn and why interest at the rate of'
  24% p.a. be not charged on the amount of credit already
  availed by them.
F     In the meantime Section 112 of the Finance Act, 2000
  was enacted and by virtue of which, interest at the rate
  of 24% p.a. had to be paid on the MODVAT credit
  wrongfully availed by the respondents in respect of the
  duty paid on the HSD Oil used as an input for a particular
G period. Similarly, Rule 57 (I) of the Rules also enables the
  Revenue to recover interest on the amount of MODVAT
  credit wrongfully availed by the assessee.

     The case of the Revenue is that by virtue of the
H provisions of Section 112 of the 2000 Act, interest
    UNION OF INDIA v. MAHARAJA SHREE UMAID                273
                      MILLS
 becomes payable on such wrongfully availed MODVAT                A
 credit after 30 days from the date on which the 2000 Act
 received the assent of the President. The Assistant
 Commissioner, Central Excise, called upon the
 respondent-assessee to pay interest at the rate of 24%
 p.a. with effect from 30 days from the date on which the         B
 2000 Act had received the assent of the President. The
 order was upheld by the Commissioner (Appeals),
 Central Excise, the Appellate Tribunal (CESTAn as also
 the High Court, and therefore, the present appeals.

     Allowing the appeals, the Court
                                                                  c
         HELD:1.1. By virtue of the Notifications issued on
   01.03.1994 and 16.03.1995 under Rule 57A of the Rules,
   the Central Government had specifically declared that
   MODVAT credit on the HSD oil used as an input would            D
    not be available as the said item had been specifically
    excluded from the list of eligible exempted inputs. lnspite
   of the said fact, several assessees were claiming
   MODVAT credit in respect of the HSD oil used as an input
   and therefore, Section 112 of the 2000 Act had to be           E
    enacted. Thus, it is clear that the said Section had been
    enacted so as to see that no one wrongfully claims
    MODVAT credit in respect of the HSD Oil used as an input
    and those who had wrongfully availed MODVAT credit in
    respect of the HSD oil used as an input, return the said      F
    amount within 30 days from the date the President gives
    assent to the 2000 Act. This clearly denotes that by virtue
    of the provisions of Section 112 of the 2000 Act, MODVAT
    credit availed on the HSD oil used as an input had not
    been withdrawn for the first time but it was declared that    G.
    if anybody had availed MODVAT credit on the HSD oil
... used as an input, will have to return it within 30 days and
    in case the amount being not refunded within 30 days,
    the amount of the MODVAT credit wrongfully availed by
    the concerned assessee had to be returned with interest
                                                                  H
    at the rate of 24% p.a. Section 112 of the 2000 Act is in
    274      SUPREME COURT REPORTS             [2013] 17 S.C.R.


A fact not having any retrospective effect but it only enables
  the Government to get back the wrongly availed MODVAT
  credit on the HSD oil used as an input. [Paras 25, 26) [286-
  8-G]

         2. The respondents had availed MODVAT credit on
8
    the HSD oil used as an· input though it was not
    permissible. Once it is certain that the MODVAT credit had
    been wrongly availed by the respondents, the Revenue
    cannot be blamed, if the amount wrongly availed by way
C   of MODVAT credit by the respondents is recovered with
    interest thereon. The Revenue had given 30 days' time
    to return the said amount to the respondents who had
    wrongly availed MODVAT credit on the HSD oil used as
    an input. If anyone who had repaid the amount wrongly
    availed within 30 days from the date on which Section
D   112 of the 2000 Act got the President's assent, that
    assessee had not to pay any interest on the amount of
    duty availed by him wrongly. But those who had availed
    the MODVAT credit on the HSD oil used as an input and
    did not return the said amount even within 30 days from
E   the date on which the President had given assent to the
    enactment of Section 112 of the 2000 Act, had to return
    the amount wrongfully retained by them with interest at
    the rate of 24% p.a. Such a course, adopted by the
    Revenue for recovery of the amount which was
F   legitimately claimed by the Revenue, cannot be said to
    be bad in law. [Para 29) [287-D-H; 288-A]

        Sangam Spinners Limited v. _union of India & Ors. (2011)
    11 sec 408: 2011 (3) SCR 1033 - relied on.

G       State of Rajasthan & Ors. v. Ghasilal (1965) 2 SCR 805;
    Harshad Shanti/al Mehta v. Custodian and Ors. (1998) 5 SCC
    1: 1998 (3) SCR 389 - Cited.
                      Case Law Reference:
H         2011 (3) SCR 1033      relied on            Para 18
   UNION OF INDIA v. MAHARAJA SHRfi:E UMAID                275
                     MILLS
    (1965) 2 SCR 805          cited                  Para 21       A
    1998 (3) SCR 389          cited                  Para 21
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
5634 of 2008.
                                                                   B
    From the Judgment and Order dated 26.03.2008 of the
High Court of Judicature for Rajasthan at Jodhpur in Central
Excise Appeal No.3 of 2003.

                            WITH
                                                                   c
C.A. Nos. 5635, 5636, 5922, 6506 of 2008, 11175 of 2013,
6886 of 2008, 906, 895, 1296 of 2009 and 11174 of 2013.
     V. Shekhar, Rahul Kaushik, Shekhar Raj Sharma, Peeyush
Jain, B. Krishna Prasad, Shreekant N. Terdal, B. V. Bairam Das
for the Appellants.                                                D
    Dr. Manish Singhvi, P. V. Yogeswaran, Alok Yadav, M.P.
Devananth, U.A. Rana, Mrinal Majumdar for the Respondent.
    The Judgment of the Court was delivered by
                                                                   E
     ANIL R. DAVE, J. 1. Leave granted in SLP (C) No 28055
of 2008 and SLP (C) No. 938 of 2010.
     2. As a common question of law is involved in all these
appeals, at the request of the learned counsel appearing for
the parties, all the appeals were heard together and they are      F
decided by this common judgment.
     3. The issue involved in all these appeals is with regard
to the liability to pay interest under the provisions of Section
112 of the Finance Act, 2000 (hereinafter referred to as 'the      G
2000 Act'), which pertains to liability of the assessee to pay
interest under the Central Excise Rules, 1944 (hereinafter
referred to as 'the Rules'). The facts of Civil Appeal No.5634
of 2008 (Union of India and others vs. Maharaja Shree Umaid
Ml1/s) are taken into consideration for better understanding of    H
    276     SUPREME COURT REPORTS                [2013] 17 S.C.R.


A   the issue involved in all these appeals.

       4. All these appeals have been filed by the Union of India
  against the respondents under the Central Excise Act, 1944.
  The respondent-assessee, Maharaja Shree Umaid Mills, whose
  case is being considered, is a manufacturer of yarn and fabrics, 1
8 which are covered under Chapters 52, 54 & 55 of the Schedule
  to the Central Excise Tariff Act, 1985. In the process of the
  manufacture of yarn and fabrics, the respondent-assessee uses
  High Speed Diesel Oil (hereinafter to as the 'HSD Oil') as fuel
  for generation of electricity i.e. power, with which manufacturing
C unit of the respondent is operated.

         5. As the HSD oil is being used as an input in the process
    of generation of electricity so as to manufacture the final
    produce i.e. yarn and fabrics, the respondent was claiming the
o   MODVAT credit of the duty paid on the HSD oil used as an
    input under the provisions of Rules 57A and 578 of the Rules.

        6. The Central Government issued a Notification on 16th
  March, 1995 whereby MODVAT credit of the duty paid on the
  HSD Oil as an input, had been withdrawn. It is not in dispute
E that the MODVAT credit of the duty paid on the use of the HSD
  Oil was available in the past but the same had been withdrawn
  by the said Notification issued in 1995. Subsequently, the office
  of the Commissioner of the Central Excise had also issued a
  Trade Notice on 7.4.1997 to the effect that no MODVAT Credit
F in respect of the duty paid on the HSD oil used as an input
  would be available under Rule 57A and 578 0f the Rules.

       7. What is relevant here is that the respondent as well as
  other assessees-respondents, whose cases are being decided
G by this common judgment, had availed the MODVAT credit of
  the duty paid on the HSD Oil, which was used as an input even
  though it was not permissible in view of the aforestated
  Notification followed by the Trade Notice. So it is not in dispute
  that though MODVA T credit was not to be availed in respect
H of the duty paid on the HSD oil used as an input, all the
   UNION OF INDIA v. MAHARAJA SHREE UMAID                   277
            MILLS [ANIL R. DAVE, J.]
assessees who are respondents, had availed the MODVAT              A
credit.

     8. In the aforestated circumstances, show cause notices
had been issued to all the respondents calling upon them as
to why the MODVAT credit availed by them during the period         B
for which they were not entitled to such a credit, should not be
withdrawn and why interest at the rate of 24% p.a. be not
charged on the amount of credit already availed by them.

     9. It is pertinent to note that in the meantime Section 112
of the 2000 Act had been enacted and by virtue of which,           C
interest at the rate of 24% p.a. had to be paid on the MODVAT
credit wrongfully availed by the respondents in respect of the
duty paid on the HSD Oil used as an input for a particular
period. Similarly, Rule 57 (I) of the Rules also enables the
Revenue to recover interest on the amount of MODVAT credit         D
wrongfully availed by the assessee.

    · 10. The case of the Revenue is that by virtue of the
provisions of Section 112 of the 2000 Act, interest becomes
payable on such wrongfully availed MODVAT credit after 30          E
days from the date on which the 2000 Act received the assent
of the President. On the other hand, according to the
respondents, the amount of interest becomes payable only after
determination of the amount thrqugh an adjudication order or
an order-in-original after issuance of a show cause notice to
the concerned assessee and if the amount of the MODVAT             F
credit availed is not repaid within 30 days from the date of the
order.

     11. In the case of Maharaja Shree Umaid Mills, the
Assistant Commissioner, Central Excise, Jodhpur, vide an           G
order dated 27.05.2002, called upon the said assessee to pay
interest at the rate of 24% p.a. with effect from 30 days from
the date on which the 2000 Act had received the assent of the
President.
                                                                   H
    278       SUPREME COURT REPORTS                 [2013] 17 S.C.R.


A        12. Being aggrieved by the order passed by the Assistant
    Commissioner, an appeal had been filed before the
    Commissioner (Appeals), Central Excise, Jodhpur, which had
    been dismissed and therefore, the assessee had filed an
    appeal before the Customs, Excise & Service Tax Appellate
s   Tribunal, New Delhi (hereinafter referred to as 'the CESTAT').
    The said appeal had also been dismissed by the CESTAT and
    therefore, the assessee was constrained to approach the High
    Court of Rajasthan by way of Central Excise Appeal No. 3 of
    2003, which has been allowed by the impugned order and
c   therefore, the Revenue has filed the present appeal.

       13. Similarly, in all other cases, the assessees had
  succeeded before the High Court in their respective cases and
  therefore, the Revenue has filed the present appeals before this
  Court. So as to understand and appreciate the issue, it would
D be pertinent to look at the provisions of Section 112 of the 2000
  Act and Rule 57 (I) of the Rules, which have been reproduced
  herein below:

          "112. Validation of the denial of credit of duty paid on
E         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
F         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
G         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
H
UNION OF INDIA v. MAHARAJA SHREE UMAID                     279
         MILLS [ANIL R. DAVE, J.]
provisions of sub-section (1) had been in force at all             A
material times and, accordingly, notwithstanding anything
contained in any judgment, decree or order of anv court.
tribunal or other authority,-

 (a) no suit or other proceedings shall be maintained or
                                                                   8
 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        C
 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       D
 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   E
 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        F
 shall be punishable as an offence which would not have
 been so punishable if this section had not come into force."

 Rule 57 (I) Recovery of credit wrongly availed of or
 utilised in an irregular manner,-                                 G
 (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
                                                                   H
    280          SUPREME COURT REPORTS               [2013] 17 S.C.R.


A         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
B         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
c         of fraud, wilful mis-statement, collusion, or suppression of
          facts, or contravention of any of the provisions of the Acts
          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
D         substituted.

           (iii)   the proper officer, after considering the
                   representation, if any, made by the manufacturer or
                   the assessee on whom notice is served under
E                  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 had been utilised, or shall not utilised the
F
                   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
G         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 of in the manner specified in this Section,
H                  the manufacturer shall upon a written demand being
UNION OF INDIA v. MAHARAJA SHREE UMAID                   281
         MILLS [ANIL R. DAVE, J.]
        made by the Assistant Commissioner of Central           A
        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        B
        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 11 AA of the Act, from the
                                                                c
        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-           D
        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           E
        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
                                                                F
 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      G
 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
 increase or further increased, amount of credit disallowed.
                                                                H
    282          SUPREME COURT REPORTS               [2013] 17 S.C.R.


A          (5)    Notwiths~anding 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, wilful mis-statement, collusion or
                  suppression of facts, or contravention of any of the
B                 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
c                 rates as may be fixed by the Board under Section
                  11 AA 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.
D
          Explanation I : for the removal of doubts, it is hereby
          declared that the provisions of this sub rule shall not
          applied to cases where the credit disallowed became
          payable before the 23rd day of July, 1996.

E         Explanation II : where the credit disallowed is reduced by
          the Commissioner of Central Excise (Appeal), 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.
F
          Explanation Ill: where the credit disallowed is increased by
          the Commissioner of Central Excise (Appeal), 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."
G
       14. The ·learned counsel appearing for the revenue had
  submitted that by virtue of the provisions of Section 112 of the
  2000 Act, one has to ignore the provisions of Rule 57 (I) of the
  Rules, as Section 112 of the 2000 Act had been enacted as a
H one- time measure to see that all those who had wrongly availed
   UNION OF INDIA v. MAHARAJA SHREE UMAID                        283
            MILLS [ANIL R. DAVE, J]
the MODVAT credit on the duty paid on the HSD oil used as                A
an input in their.factories repay the amount wrongfully retained
by them immediately. The learned counsel had discussed
various provisions whereby the position with regard to the
admissibility of the MODVAT credit on duty paid on the HSD
oil used as an input had been changed from time to time in the           B
past till the litigation which had been finally decided by this court.
As there is no dispute with regar'd to the non-admissibility of
the MODVAT credit on the HSD oil used as an input for the
period commencing from 16.03.1995 till the date the 2000 Act
received the President's assent, we need not discuss the                 c
relevant rules and notificatio'ns in pursuance of which the
MODVAT credit in respect of the duty paid on the HSD oil as
an input was not admissible.

    15. The learned counsel had submitted that the provisions
of Section 112 (2)(b) of the 2000 Act clearly enables the                D
Revenue not only to recover the entire MODVAT credit which
had been wrongly availed by the concerned assessees within
30 days from the date on which the 2000 Act had received
assent of the President but in the event of non-payment of the
amount within the said period, it enables the Revenue to                 E
recover interest at the rate of 24% per annum from the date
immediately after expiry of the said period of 30 days till the
date of payment of the amount by the concerned assessee.

      16. It had been further submitted by the learned counsel           F
for the Revenue that the provisions of Section 112 of the 2000
Act are merely declaratory in nature. In fact MODVAT credit on
the use of the HSD oil as an input was not permissible by virtue
of Notifications issued in 1995. In spite of the fact that the
MODVAT credit was not available on the HSD oil, several                  G
assessees were claiming credit on the HSD oil as an input and
therefore, by virtue of Section 112 of the 2000 Act it was
declared that no MODVAT credit would be available on the
HSD oil, used as an input. He had, therefore, submitted that in
fact there was no retrospective increase in the liability of the
                                                                         H
    284     SUPREME COURT REPORTS                 [2013] 17 S.C.R.


A assessees by virtue of Section 112 of the 2000 Act.

       17. According to the learned counsel, the aforestated
  provisions, in an unambiguous language, authorizes the
  Revenue to recover interest at the rate of 24% p.a. without any
  reference to any show cause notice or any other condition and
8
  therefore, as per his submission, the assessee was bound to
  pay interest as demanded by the Assistant Commissioner,
  Central Excise by the order dated 27.05.2002 and the High
  Court was in error in setting aside the orders whereby the
  amount of interest was sought to be recovered from the
C respondents.

       18. The learned counsel had relied upon judgments which
  restrained the manufacturers from claiming the MODVAT credit
  on use of the HSD Oil as an input for the period commencing
D from 16.03.1995 till the date the 2000 Act received the
   President's assent. Among other judgments, the learned
  counsel appearing for the Revenue had mainly relied upon the
  judgment delivered in the case of Sangam Spinners Limited
   v. Union oflndia & Ors. [(2011) 11 SCC 408].
E
         19. On the other hand, the learned counsel appearing for
    the respondents had supported the reasons given by the High
    Court while quashing and setting aside the orders passed by
    the CESTAT whereby imposition of interest at the rate of 24%
    p.a. on the amount of the MODVAT credit availed on the use
F   of the HSD oil as an input, for the period referred to
    hereinabove, was upheld.

       20. The learned counsel had submitted that Section 112
  of the 2000 Act cannot be read in isolation, but it must be read
G with the provisions of Rule 57 (I) of the Rules. According to
  them, in any case, before demanding interest from any
  assessee, first of all the final liability, i.e. the amount payable
  has to be ascertained and only upon ascertainment of the
  amount payable, interest can be calculated and demanded on
H the said amount.
   UNION OF INDIA v. MAHARAJA SHREE UMAID                 285
            MILLS [ANIL R. DAVE, J.]
     21. It had also been submitted by the learned counsel A
appearing for the respondents that by virtue of the retrospective
effect, liability of the respondents had been increased not only
by not permitting to avail MODVAT credit on use of the HSD
oil as an input for the period referred to hereinabove but also
by imposition of interest @ 24% p.a. on the amount of the B
MODVAT credit availed on the HSD oil used as an input with
effect from 30 days from the date on which the President had
given assent to Section 112 of the 2000 Act. The learned
counsel had relied upon several judgments including the
judgments delivered in the cases of State of Rajasthan & Ors. c
 v. Ghasilal [(1965) 2 SCR 805) and Harshad Shanti/al Mehta
v. Custodian and Ors. [(1998) 5 SCC 1) to substantiate their
submissions to the effect•that till the amount of tax is
determined, no interest can be levied on the amount of tax.

     22. Thus, the learned counsel appearing for the D
respondents had prayed that the appeals should be dismissed
for the sound reasons recorded by the High Court in the
impugned judgment.

     23. Upon perusal of the impugned judgment and the            E
judgments referred to by the learned counsel appearing for both
sides, we are of the view that the impugned judgment deserves
to be quashed and set aside for the reasons recorded
hereinafter.

     24. Upon perusal of the impugned judgment as well as the F
provisions of Section 112 of the 2000 Act, one might have an
impression that the Revenue has become harsh in imposing
interest at the rate of 24% p.a. on the amount of MODVAT
credit availed on the HSD oil used as an input without any
adjudication of the amount payable or without even issuance G
of a show cause notice. In fact if we look at the provisions of
Section 112 of the 2000 Act along with other notifications which
had been issued earlier in 1995 and 1994, whereby availment
of MODVAT credit on the HSD oil used as fuel in generation
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   286       SUPREME COURT REPORTS                (2013) 17 S.C.R.


A of electricity had been ordered to be discontinued, we would
  feel that the first impression that one would gather upon perusal
  of Section 112 of the 2000 Act would not be correct.

         25. It is necessary to took at the background and the
B circumstances in which Section 112 of the 2000 Act had been
    enacted. By virtue of the Notifications issued on 01.03.1994 and
    16.03.1995 issued under Rule 57A of the Rules, the Central
    Government had specifically declared that MODVAT credit on
    the HSD oil used as an input would not be available as the said
    item had been specifically excluded from the list of eligible
C exempted inputs. In spite of the said fact, several assessees
    were claiming MODVAT credit in respect of the HSD oil used
    as an input and therefore, Section 112 of the 2000 Act had to
    be enacted. Thus, it is clear that the said Section had been
    enacted so as to see that no one claims MODVAT credit in
D respect of the HSD Oil used as an input and those who had
    wrongfully availed MODVAT credit in respect of the HSD oil
    used as an input and those who had claimed the credit
    wrongfully, return the said amount within 30 days from the date
  ' the President gives assent to the 2000 Act. This clearly denotes
E that by virtue of the provisions of ~ection 112 of the 2000 Act,
    MODVAT credit availed on the HSD oil used as an input had
    not been withdrawn for the first time but it was declared that if
    anybody had availed MODVAT credit on the HSD oil used as
    an input, will have to return it within 30 days and in case the
f amount being not refunded within 30 days, the amount of the
    MODVAT credit wrongfully availed by the concerned assessee
    had to be returned with interest at the rate of 24% p.a.

       26. The aforestated factual aspect would clarify that
  Section 112 of the 2000 Act is in fact not h.aving any
G retrospective effect but it only enables the Government to get
  back the wrongly availed MODVAT credit on the HSD oil used
  as an input

       27. A somew~at similar issue had arisen before this Court
H in the case of Sangam Spinners Limited (supra) and after
   UNION OF INDIA v. MAHARAJA SHREE UMAID                     287
            MILLS [ANIL R. DAVE, J.]
considering earlier Notifications issued by the Government, it        A
had been held that Section 112 of the 2000 Act did not take
away any right of any assessee with retrospective effect. This
court held in the said case that the HSD oil had been
specifically excluded from the list of eligible inputs with effect
from 16th March, 1995 and therefore, no assessee had any              B
vested right to avail benefit of MODVAT credit on the HSD oil
used as an input and therefore, if any benefit, which had been
wrongly availed by any manufacturer, the benefit wrongfully
availed had to be returned.

      28. It is also pertinent to note that the validity of Section   C
112 of the 2000 Act had not been challenged in the petitions
filed by the respondents and therefore, we need not go into the
legality of the said Section.

     29. In the aforestated circumstances, in our opinion, there D
was no issue with regard to any adjudication because the
respondents had availed MODVAT credit on the HSD oil used
as an input though it was not permissible. Once it is certain that
the MODVAT credit had been wrongly availed by the
respondents, in our opinion, the Revenue cannot be blamed, if E
the amount wrongly availed by way of MODVAT credit by the
respqndents is recovered with interest thereon. It is also
pertinent to note that the Revenue had given 30 days' time to
return the said amount to the respondents who had wrongly
availed MODVAT credit on the HSD oil used as an input. If F
anyone who had repaid the amount wrongly availed within 30
days from the date on which Section 112 of the 2000 Act got
the P;esident's assent, that assessee had not to pay any
interest on the amount of duty availed by him wrongly. But those
who had availed the MODVAT credit on the HSD oil used as
an input and did not return the said amount even within 30 days G
from the date on which the Pre.sident had given assent to the
enactment of Section 112 of the 2000 Act, had to return the
amount wrongfully retained by them wittl interest at the rate of
24% p.a. In our opinion, such a course, adopted by the Revenue
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   288      SUPREME COURT REPORTS            (2013] 17 S.C.R.


A for recovery of the amount which was legitimately claimed by
  the Revenue, cannot be said to be bad in law.

       30. In the circumstances and for the reasons recorded
  hereinabove, we are of the view that the High Court committed
  an error by not considering the aforestated factors and
8
  therefore, we quash and set aside the impugned judgment by
  allowing these appeals with no order as to costs. The stay
  granted is vacated.
   Bibhuti Bhushan Bose                          Appeals allowed