2011 (9) TMI 977 - HC - Central Excise

High Court dismisses appeal on interest demand pre-amendment, assessee not liable for interest pre-2001.

The Karnataka High Court dismissed the appeal challenging the Tribunal's decision on interest demand under Section 11AB of the Central Excise Act, 1944 ... Liability of interest - Section 11AB of the Central Excise Act, 1944 - Held that: - Section 11AB of the Act had no application prior to the coming into force of the amendment. It is only after the amendment was introduced to Section 11AB of the Act, the assessee was liable to pay interest. The dispute pertains to the period prior to the amendment. Therefore, the authorities were justified in holding that there is no liability to pay interest under Section 11AB of the Act - appeal dismissed - decided against Revenue. Issues:Appeal challenging Tribunal's order on interest demand under Section 11AB of Central Excise Act, 1944 for the period between September 1999 to December 2001.Analysis:The High Court heard an appeal challenging the Tribunal's decision regarding the demand for interest under Section 11AB of the Central Excise Act, 1944 for the period from September 1999 to December 2001. The amendment to Section 11AB through the Finance Act, 2001, introduced sub-section (2) which became effective from 11-5-2001. The amendment clarified that the liability to pay interest under sub-section (1) of Section 11AB did not apply to cases where duty was payable before the Finance Bill, 2001 received the President's assent. As the dispute in this case pertained to the period before the amendment, the Court found that the assessee was not liable to pay interest under Section 11AB during that time. Therefore, the authorities were justified in their decision that there was no liability to pay interest under Section 11AB for the relevant period. Consequently, the Court held that no substantial question of law arose for consideration in the appeal, leading to the dismissal of the appeal.The judgment emphasized that the amendment to Section 11AB of the Central Excise Act, 1944, brought about a significant change in the liability to pay interest, making it clear that the obligation to pay interest was not applicable to cases before the introduction of the amendment. This clarification was crucial in determining the assessee's liability for interest during the period in question. The Court's analysis focused on the timeline of events, highlighting the importance of the effective date of the amendment in relation to the duty payable and the assent of the President to the Finance Bill, 2001. By interpreting the provisions of Section 11AB in light of the amendment and the specific period in dispute, the Court provided a clear rationale for its decision to dismiss the appeal challenging the interest demand under the Act.In conclusion, the judgment by the Karnataka High Court in this case addressed the specific issue of interest demand under Section 11AB of the Central Excise Act, 1944 for a particular period before the relevant amendment. By analyzing the legislative intent behind the amendment and its impact on the liability to pay interest, the Court upheld the authorities' decision that there was no obligation to pay interest during the period in question. This detailed analysis of the legal provisions and their application to the factual circumstances of the case formed the basis for the Court's decision to dismiss the appeal, thereby providing clarity on the issue of interest liability under Section 11AB of the Act.