Interest on wrongly availed Cenvat credit before 11-5-2001 referred to Larger Bench amid conflicting interpretations.

Interest liability on wrongly availed Cenvat credit for the period before 11-5-2001 was examined with reference to Rule 57-I, Rule 57AH, Rule 12 of the Cenvat Credit Rules, 2001, and Sections 11AA and 11AB of the Central Excise Act, 1944. The order considered whether amended Section 11AB continued to permit recovery of interest where the demand was confirmed by invoking the extended period, and whether the saving principle in Section 6 of the General Clauses Act preserved such liability. Noting conflicting Tribunal views and the effect of the 11-5-2001 amendment, the Bench referred the question to the President for constitution of a Larger Bench.

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Issues: Whether interest on wrongly availed Cenvat credit for the period prior to 11-5-2001 could be recovered under Section 11AB of the Central Excise Act, 1944 where the demand had been confirmed by invoking the extended period, and whether the earlier and amended credit-recovery provisions continued to sustain such liability.

Analysis: The order examined the effect of Rule 57-I of the Central Excise Rules, 1944, Rule 57AH of the Central Excise Rules, 1944 and Rule 12 of the Cenvat Credit Rules, 2001, together with Sections 11AA and 11AB of the Central Excise Act, 1944. It also considered the saving principle in Section 6 of the General Clauses Act and the legislative intent behind the amendment to Section 11AB with effect from 11-5-2001. Competing Tribunal decisions were noted on the question whether the amendment took away interest liability for the pre-amendment period.

Conclusion: The issue was not finally decided on merits by the Bench and was referred to the President for constitution of a Larger Bench to determine whether interest under Section 11AB was payable for the period prior to 11-5-2001 in cases involving the extended period and recovery under the credit-reversal provisions.

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