Retroactive interest under Section 11AB was impermissible for a period before the provision came into force.

Interest under Section 11AB of the Central Excise Act could not be levied for a period before that provision came into force. The dispute related to October 1996 to April 1997, while Section 11AB became operative only on 28 September 1998. A show cause notice issued after the provision's commencement did not extend the interest liability retrospectively to a period when no such statutory liability existed. The operative provision governed only the period for which it was in force, so recovery of interest for the pre-commencement period was not permitted.

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Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 could be levied for a period prior to the commencement of that provision.

Analysis: The dispute period related to October 1996 to April 1997, whereas Section 11AB came into force only on 28.09.1998. The mere fact that the show cause notice was issued after the provision had been introduced did not authorise recovery of interest for a period when the provision was not in force. A liability to pay interest could arise only for the period covered by the operative statutory provision, and not by extending the later enactment to an earlier period of dispute.

Conclusion: Interest under Section 11AB could not be recovered for the pre-commencement period, and the challenge raised by the revenue failed.

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