Interest rates to be prescribed under new section 11AA - Rule 14 of CCR, 2004 requires amendment
A Netizen has sent us this:
By the Finance Act, 2011 w..e.f 08.04.2011, the erstwhile sections 11AA and 11AB of the Central Excise Act have been substituted by a new section 11AA.
Incidentally, no notification has been issued under the new section 11AA prescribing the rate of interest an assessee has to pay on the amount of central excise duty voluntarily paid or determined under the new section 11A of the CEA, 1944. It can also be deduced that the contents of new section 11AA of the CEA, 1944 would apply only to cases covered by the new section 11A of the CEA, 1944 effective 08.04.2011.
It may also be noted that two notifications 5/2011-CX(N.T) and 6/2011-CX(N.T), both dated 01.03.2011 were issued raising the rate of interest to be paid by an assessee under the erstwhile sections 11AA and 11AB of the CEA, 1944. The interest rate that is in force is 18% and is effective from 01.04.2011. These notifications have not been withdrawn after the enactment of the Finance Act, 2011 and obviously so.
In view of the saving provisions contained in section 38A of the CEA, 1944, the earlier sections 11A, 11AA and 11AB continue to remain in operation and would apply to the duty demands in respect of clearances made up to the 7 th April, 2011.
Having said that, it would also be essential to highlight that rule 14 of the Cenvat Credit Rules, 2004 relating to recovery of CENVAT credit wrongly taken or erroneously refunded still makes a mention of the old section 11AB of the CEA, 1944. This needs to be corrected retrospectively (w.e.f 08.04.2011) by making a reference to the new section 11AA of the CEA, 1944. Needless to mention, thereafter, the applicability of section 11AB to rule 14 would legally cease on 07.04.2011.
It would be in the fitness of things that the Board intervenes and does the needful in the matter.
Another Netizen asks, “C onsequent to enactment of Finance Act, Sec 11AB and 11AA of Central Excise Act have been substituted with new Sec 11AA. Reference of these two Sections is there at many places in Central Excise Rules, Cenvat Credit Rules , Service Tax Rules etc. Is Govt going to amend all these relevant rules / notifications replacing the Sec 11AB with Sec 11AA w.e.f. 8.4.2011 either by general notification or specific notifications?
We are getting several such queries.
Will the Government clarify?