Interest liability on restrospective amendment

The Government amended Chapter 15 of the Central Excise Tariff Act with restospective effect to bring one or more of the processes of treatment of crude oil with an alkali, bleaching and deodorisation amounting to ‘manufacture’ to nullify the impact of the Supreme Court judgment in the case of Shyam Oil Cake Ltd. vs. CCE [2004 (174) ELT 148 (SC)]. The restrospective amendment came in force from the 1 March, 1986 till 28 February, 2005.

Whether the processors are liable to pay interest on the duty on deemed manufacture of the refined oil?

The amendment of Chapter 15 came on 13.5.2005 with retrospective effect. In terms of Section 11AB(1) of the Central Excise Act, where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay duty, is liable to pay interest. In the present case, there is no short levy or short payment of duty prior to 13.5.2005 as the duty was levied with retrospective effect consequent upon amendment by Finance Bill, 2005 as enacted on 13.5.2005.

Therefore, there is no liability to pay interest under Section 11AB(1) of the Excise Act.