Interest on Section 11D recoveries was not chargeable under Section 11AB before Section 11DD came into force.

Interest under Section 11AB of the Central Excise Act was confined to duty that was short-levied, short-paid, not levied, or erroneously refunded, and did not extend to amounts recoverable under Section 11D from buyers of exempted goods. The amount collected by the assessee was treated as distinct from duty under Section 11A, and a separate interest provision for Section 11D liabilities came only with Section 11DD from 14 May 2003. As Section 11DD was not expressed to operate retrospectively, interest could not be demanded under Section 11AB for the earlier period, making the recovery of interest unsustainable.

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Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 was leviable on an amount recoverable under Section 11D of the Central Excise Act, 1944 for the period prior to insertion of Section 11DD of the Central Excise Act, 1944.

Analysis: The amount collected by the assessee from buyers while clearing exempted goods was treated as payable under Section 11D, but that amount was distinct from duty recovered under Section 11A. Section 11AB applied to duty that was short-levied, short-paid, not levied, or erroneously refunded, and not to amounts recoverable under Section 11D. A separate interest provision for amounts payable under Section 11D was introduced only by Section 11DD with effect from 14 May 2003. In the absence of any indication that Section 11DD operated retrospectively, interest could not be demanded for the earlier period under Section 11AB.

Conclusion: Interest under Section 11AB was not payable on the amount demanded under Section 11D for the relevant period, and the recovery of interest was unsustainable.

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