The court holds that interest claims under Section 11AB are subject to prior legislative applicability and pending appeal proceedings warrant protective measures.

ORDER

A show cause notice dated 15.12.2023 is challenged in this writ petition. Proceedings were initiated under the Central Excise Act, 1944 against the petitioner. In relation thereto, an order in original dated 22.06.2009 was issued. Such order was carried in appeal and eventually the Customs Central Excise and Service Tax Appellate Tribunal (the CESTAT) disposed of the matter by order dated 07.03.2023. In terms of such order, the respondents succeeded to the extent of a claim of Rs.49,00,000/- with interest thereon. The petitioner has filed a civil miscellaneous appeal against such order before this Court insofar as it relates to the liability to pay interest on the sum of Rs.49,00,000/-, but the appeal is yet to be numbered on account of the pending application for condonation of delay. The present writ petition was filed in these facts and circumstances.

2. Learned senior counsel for the petitioner referred to Section 11AB of the Central Excise Act and pointed out that such provision came into effect on 11.05.2001. He further submitted that sub-section (2) thereof makes it abundantly clear that sub-section (1) thereof would not apply to cases where duty became payable or ought to have been paid before the date on which sub-section (1) came into force. By virtue of sub-section (2), learned senior counsel submits that sub-section (1) is inapplicable to the claim for interest by the respondents. On account of the order of the CESTAT, learned senior counsel contends that the first respondent would merely follow the order of CESTAT and that the petitioner would have no meaningful opportunity to show cause.

3. Mr.Rajnish Pathiyil, learned senior standing counsel, accepts notice for the respondents. By referring to paragraph 17 of the order of CESTAT, he submits that the said order holds the field as on date and would be binding on all the parties.

4. Since an appeal has been filed against the order of CESTAT with regard to the imposition of interest on the sum of Rs.49,00,000/- and the said appeal is pending consideration, it is just and appropriate to provide protection to the petitioner until such appeal is taken up. Therefore, W.P.No.9231 of 2024 is disposed of with the following directions:

(i) The petitioner shall reply to the show cause notice but the first respondent is restrained from issuing any orders or from appropriating the interest liability from and out of the sum of Rs.1.28 crores lying with the respondents until the matter is taken up by the appellate court. This will not stand in the way of the respondents appropriating the principal sum of Rs.49,00,000/- from the amounts lying with them.

(ii) The petitioner is directed to take all necessary measures to one month number and list the appeal within .

(iii) No costs.

(iv) Consequently, W.M.P.No.10269 of 2024 is closed.