Retrospective interest on lapsed credit starts from the statutory trigger date and remains payable at the prescribed rate.

Retrospective amendment under the Finance Act, 1999 revived liability to interest on lapsed credit, with the operative commencement tied to thirty days after receipt of presidential assent. The earlier date of 07.09.1998 was inconsistent with that statutory trigger, so interest was confined to 11.06.1999 to 10.10.2000. The reduced rate of 18% was rejected because the levy operated under the Finance Act, 1999 read with Section 11AB of the Central Excise Act, 1944, and the applicable rate remained 36% per annum.

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Issues: Whether interest on the lapsed credit was payable from 07.09.1998 to 10.10.2000, or only from 11.06.1999 to 10.10.2000, and whether the rate of interest was 36% or 18%.

Analysis: The credit had lapsed under the retrospective amendment brought in by the Finance Act, 1999. The statutory scheme provided that if the amount was not paid within thirty days of receipt of the President's assent, interest would become payable at 36% per annum. The date from which interest was imposed by the lower authority, namely 07.09.1998, was inconsistent with the statutory commencement of liability. The concession sought by the assessee on the commencement date was accepted, but the plea for a reduced rate was not supported because the interest was levied under the Finance Act, 1999 read with Section 11AB of the Central Excise Act, 1944.

Conclusion: Interest was payable only from 11.06.1999 to 10.10.2000 at 36% per annum, and the demand was modified accordingly.

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