High Court rules Section 11AB operates prospectively

The High Court of Jharkhand at Ranchi held that Section 11AB of the Central Excise Act, 1944 operates prospectively. The respondent was not liable to pay interest on duty determined before the section's enactment. The Court dismissed the Revenue's application seeking clarification on the levy of interest under Section 11AB for past duty evasion, stating that the provision does not apply retroactively. The Tribunal's decision was upheld, and the respondent was not required to pay interest on duty determined before the section's applicability.

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Issues involved: Interpretation of Section 11AB of the Central Excise Act, 1944 regarding the liability to pay interest on duty determined and payable.

In this case, the High Court of Jharkhand at Ranchi addressed the issue of interpreting Section 11AB of the Central Excise Act, 1944. The Customs, Excise & Gold (Control) Appellate Tribunal set aside the penalty imposed but did not address the imposition of interest. The Tribunal later held that the respondent was not liable to pay interest on the duty determined and payable for the period between 1-4-1989 to 30-6-1995 as it was not covered by Section 11AB.

The Revenue sought clarification on whether the Adjudicating Authority could levy interest under Section 11AB for duty determined after its insertion, even for past duty evasion. Section 11AB states that interest is applicable in cases of delayed duty payment due to fraud, collusion, or contravention of the Act. It clarifies that the provision does not apply to duties payable before the Finance Act of 1996 received presidential assent.

The Court noted that Section 11AB was added to the Act in 1996 and its applicability is prospective. Citing a Supreme Court judgment, it was established that similar provisions like Section 11AC are also prospective. The Court agreed with previous decisions that Sections 11AB and 11AC operate prospectively, meaning interest is not applicable to duty determined before the section's enactment.

Based on the understanding of Section 11AB and previous judgments, the Court held that the respondent was not liable to pay interest on duty determined before the section's applicability. Consequently, the Tribunal's order dated 8-2-2001 was deemed correct, and the Revenue's application was dismissed.

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