Pre-2001 central excise interest liability under Section 11AB was not sustainable where duty became payable before the substitution.

Interest liability under Section 11AB of the Central Excise Act could not be fastened for duty that became payable before the substitution of that provision by the Finance Bill, 2001. The proviso to the substituted section expressly excluded pre-assent liabilities, showing clear legislative intent to prevent retrospective application. Section 6A of the General Clauses Act did not preserve the earlier interest provision for such pre-2001 periods. On that basis, the demand of interest for the relevant pre-2001 period was held unsustainable and set aside.

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Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 could be levied for a period when the duty had become payable before the substitution of the provision by the Finance Bill, 2001.

Analysis: The proviso to the substituted Section 11AB expressly excluded cases where duty had become payable or ought to have been paid before the President's assent to the Finance Bill, 2001. In view of this clear legislative intent, the saving principle in Section 6A of the General Clauses Act, 1897 did not preserve the earlier provision for such pre-2001 liabilities. The demand of interest under the repealed provision was therefore not sustainable for the relevant period.

Conclusion: Interest under Section 11AB could not be levied for the pre-2001 period, and the demand of interest was set aside.

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