Interest on pre-notice duty payment not payable where Section 11A(2B) was inapplicable to the disputed period.

Interest under Section 11AB of the Central Excise Act could not be demanded on duty already paid before issuance of the show cause notice where the dispute period predated the insertion of Section 11A(2B) and its explanations. The amended provision took effect only from 11-5-2001, while the relevant period was November 1997 to May 1998, so it did not apply retrospectively to the assessee's liability. Accordingly, the interest demand on the duty amount paid before the notice was unsustainable and the issue was decided in favour of the assessee.

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Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 could be demanded on duty paid before issuance of the show cause notice for a period prior to the insertion of Section 11A(2B) and its explanations.

Analysis: The earlier question of penalty under Section 11AC had already been covered against the Revenue by the Tribunal's prior final order. On the interest claim, the relevant sub-section (2B) of Section 11A and its explanations were inserted with effect from 11-5-2001, whereas the dispute period was November 1997 to May 1998. As the amended provision was not applicable to the period in dispute, the demand for interest on the duty amount already paid before issuance of the show cause notice could not be sustained.

Conclusion: Interest under Section 11AB was not payable on the duty paid prior to issuance of the show cause notice for the period in dispute. The issue was decided in favour of the assessee and against the Revenue.

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