Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs M.P. Tapes on 28 May, 1998
Equivalent citations: 1998ECR10(TRI.-CHENNAI), 1998(103)ELT128(TRI-CHENNAI)
ORDER
U.L. Bhat, President
1. The Commissioner of Central Excise, Coimbatore seeks reference of the following question to the jurisdictional High Court under Section 35G of the Central Excise Act, 1944 :-
"Whether the Hon'ble Tribunal was correct in holding that the mandatory penal interest under section 11AB of the Central Excise Act, 1944 will not apply to a case where the duty became payable on 23-1-1997 i.e. the date of confirmation of demand by Commissioner under section 11A(2) though in terms of section 11AB(2) of Central Excise Act, 1944, the said section would be applicable to the cases where the duty became payable after the date on which Finance (No. 2) Bill, 1996 receives the assent of the President, i.e. 28-9-1996."
2. The demand for differential duty relates to clearances made during the period from September, 1995 to January, 1996. The Commissioner of Central Excise took up the matter for adjudication on the assessee waiving show cause notice and confirmed the demand of differential duty and imposed penal interest under Section 11AB of the Act, besides imposing penalty under Section 11 AC of the Act. In appeal filed by the assessee, the Tribunal set aside the imposition of mandatory penalty as well as the penal interest. The department does not challenge the cancellation of the imposition of penalty, but seeks to raise a question of law in regard to imposition of penal interest.
3. The Tribunal relied on the decision of Supreme Court in the case of Brij Mohan v. Commissioner of Income Tax reported in 120 ITR1 (S.C.), wherein it was held that penalty could not be imposed under the parallel provision newly introduced in the Income Tax Act in respect of an act or omission prior/to the incorporation of the provision. The Tribunal, on the same analogy, held that penal interest could not be imposed in respect of duty short-paid for'the period prior to incorporation of Section 11AB of the Act. The penal interest is by way of penalty. Any penal law can only have prospective effect and not retrospective effect. This is the principle upheld by the Supreme Court in case of Brij Mohan. The same principle would apply to penal interest.
4. As the matter is covered by the aforesaid decision, we hold that no question of law arises for reference to the jurisdictional High Court.
5. Reference Application is dismissed.