Interest under Central Excise law runs from the original adjudication fixing duty, even if the demand is later modified on appeal.

Section 11AA of the Central Excise Act, 1944 was applied to treat the adjudicating authority's first determination of duty as the relevant date for interest. The analysis states that, under the first proviso read with Explanation I, interest accrues from the original adjudication fixing duty liability, even if the demand is later reduced in Commissioner (Appeals), Tribunal, or court proceedings. On that basis, the article records that the contrary claim was rejected and the interest demand from the date of original duty determination was sustained.

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Issues: Whether interest under Section 11AA of the Central Excise Act, 1944 becomes payable from the date on which the adjudicating authority first determines the duty as payable, or only from the date on which the demand is ultimately affirmed or reduced in further appellate proceedings.

Analysis: The first proviso to Section 11AA, read with Explanation I, treats the date of the initial determination of duty payable by the adjudicating authority as the relevant date for interest, even where the duty amount is later reduced by the Commissioner (Appeals), the Appellate Tribunal, or the court. Since the duty liability was first determined by the adjudicating authority on 24-7-1995, interest accrued from that date and not from the later stage when the matter travelled through appellate proceedings.

Conclusion: Interest was payable from the date of the original adjudication determining duty liability, and the assessee's contrary claim was rejected.

Final Conclusion: The appeal failed and the demand for interest from the date of original duty determination was sustained.

Ratio Decidendi: Under Section 11AA of the Central Excise Act, 1944, interest on duty becomes payable from the date duty is first determined to be payable by the adjudicating authority, notwithstanding subsequent appellate modification of the duty demand.

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