Amended interest rate under Excise Rule 8(3) applied after 1 April 2003, making the Revenue's appeal succeed.

On default in payment of excise duty, the applicable interest rate for the period after 1 April 2003 was the enhanced rate introduced by the amended Rule 8(3) of the Central Excise Rules, 2002, not the earlier pre-amendment rate. The amended provision, which took effect from 1 April 2003, had to be given full effect for the period to which it applied; applying the old rate after the amendment would make the change ineffective and otiose. The amended rate therefore governed the period from 1 April 2003 to 2 September 2003, and the Revenue's appeal succeeded.

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Issues: Whether, on default in payment of excise duty, the rate of interest applicable for the period after 1.4.2003 was the pre-amendment rate prevailing on the date the duty became due or the enhanced rate introduced by the amended Rule 8(3) of the Central Excise Rules, 2002.

Analysis: The interest rate under Rule 8(3) was enhanced with effect from 1.4.2003 by the Central Excise (Second Amendment) Rules, 2003. Once the amended provision came into force, it had to be given full effect for the period to which it applied. Applying the earlier rate after the amendment would deprive the amended rule of practical operation and would render the amendment infructuous or otiose. A statute is not to be construed so as to make its provisions ineffective.

Conclusion: The amended rate of interest under Rule 8(3) of the Central Excise Rules, 2002 applied for the period from 1.4.2003 to 2.9.2003, and the Revenue's appeal succeeded.

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