Pre-deposit of interest under unamended section 35F cannot rest on later retrospective expansion of "duty demanded".

Pre-deposit of interest could not be compelled where the appeal was governed by the unamended section 35F of the Central Excise Act and the demand arose from finalisation of provisional assessment. The Court noted that the explanation enlarging "duty demanded" to include interest and certain other amounts was inserted later and could not be applied retrospectively absent express words or necessary implication. On that basis, the Tribunal lacked authority to require pre-deposit of the interest amount for the relevant period, and the direction was set aside in favour of the assessee.

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Issues: Whether the Tribunal was justified in directing pre-deposit of the interest amount for the period prior to the statutory scheme governing such demand, despite the appeal being governed by the unamended section 35F of the Central Excise Act, 1944.

Analysis: The appeal turned on the scope of pre-deposit under section 35F and the effect of a provisional assessment. The demand arose from a finalisation of provisional assessment, and the statutory scheme had to be applied as it stood when the appeal was filed. The explanation to section 35F, which brought within the expression "duty demanded" amounts determined under section 11D and interest payable under the Act or rules, was inserted only with effect from 11 May 2007. The Court held that the relevant statutes did not authorise the Tribunal to compel pre-deposit of interest for the period in question, particularly when the liability itself was linked to final assessment and the statutory expansion of section 35F was not in force for the relevant appeal stage. The Court also noted that a statute is presumed to be prospective unless made retrospective by express words or necessary implication.

Conclusion: The Tribunal was not correct in directing pre-deposit of the interest amount. The issue was answered in favour of the assessee.

Final Conclusion: The appeal succeeded and the impugned order directing pre-deposit of interest was set aside.

Ratio Decidendi: A pre-deposit direction cannot be sustained unless it is supported by the governing version of section 35F, and a later enlargement of the expression "duty demanded" cannot be applied retrospectively to compel deposit of interest in a matter governed by provisional assessment.

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