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Issues: Whether interest was payable under Section 11A(2B) of the Central Excise Act, 1944 on duty voluntarily paid before issuance of show cause notice, where the demand itself was already time-barred and the finding of no suppression or misdeclaration had attained finality.
Analysis: The finding that there was no suppression, misstatement, or intent to evade duty had become final, so the extended period of limitation was unavailable and the Department could not have validly recovered the duty by notice under Section 11A(1) after the normal period had expired. Section 11A(2B) applies to voluntary payment made before service of a valid notice under sub-section (1), and Explanation 2 only clarifies that interest is payable on amounts paid under that sub-section. The Explanation cannot enlarge the main provision to cover a case where recovery itself had become time-barred. Accepting the Department's view would create the incongruous result that a time-barred duty demand could still attract interest merely because the assessee paid it voluntarily.
Conclusion: Interest was not payable under Section 11A(2B) in the facts of the case, and the Tribunal was in deleting the interest demand. The decision was in favour of the assessee.
Ratio Decidendi: Section 11A(2B) applies only where voluntary payment is made before service of a valid, enforceable notice under Section 11A(1), and it does not extend to a demand that has already become time-barred.
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