Pre-11-05-2001 central excise duty interest was barred by the statutory exclusion under Section 11AB(2), and the demand failed.

Interest on delayed central excise duty was not leviable for liabilities that became payable before 11-05-2001, because Section 11AB(2) excludes pre-assent duties from the scope of Section 11AB(1). As the duty and corresponding interest demand related to clearances made between July and October 2000, the statutory exclusion applied and the interest demand could not be sustained. The Revenue's challenge therefore failed, and the order deleting the interest demand was upheld.

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Issues: Whether interest on delayed payment of central excise duty was leviable for the period prior to 11-05-2001 in view of Section 11AB(2) of the Central Excise Act, 1944.

Analysis: Section 11AB provides for levy of interest on delayed payment of duty, but sub-section (2) expressly excludes cases where the duty had become payable, or ought to have been paid, before the date on which the Finance Bill, 2001 received the assent of the President. The duty in question related to clearances made between July and October, 2000, and the demand for interest was also relatable to that period. On that basis, the statutory exclusion applied and interest was not recoverable under Section 11AB(2).

Conclusion: The demand of interest was not sustainable under Section 11AB(2) and the challenge by the Revenue failed.

Final Conclusion: The appeal did not establish any basis for interference with the order deleting the interest demand, and the assessee's position was upheld.

Ratio Decidendi: Interest under Section 11AB of the Central Excise Act, 1944 is not leviable for duty that became payable before 11-05-2001, because sub-section (2) excludes such pre-assent liabilities from the scope of sub-section (1).

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