CX - New Section 11AA inserted by Finance Act, 2011 finally finds mention in Central Excise Rules, Cenvat Credit Rules and notifications

By TIOL News Service

NEW DELHI, MAR 16, 2012: THE Finance Act, 2011 (which came into force from 08 th April, 2011) inserted a new section11AA of the CEA, 1944 substituting the two earlier sections 11AA and 11AB of the CEA, 1944.

For the past nearly one year, TIOL has been carrying various articles and drawing the attention of the CBEC to the fact that the new section 11AA needs to be mentioned in various rules and notifications as all the rules/notifications made a reference to the earlier section 11AB of the CEA, 1944.

Nonetheless, the fact of the matter is that interest rates (of 18% p.a) under section 11AA (the old one) and the earlier section 11AB of the CEA, 1944 are still in vogue by virtue of notifications 05/2011-CE(NT) and 06/2011-CE(NT), both dated 01.03.2011 and effective from 01.04.2011, and rightly so.

However, no new notification has been issued post 08.04.2011 when the new section 11AA came into force. Obviously, the notification 05/2011-CE(NT) cannot be treated as catering to the new section 11AA since the section 11AA had not seen the light of the day on 01.04.2011. Suffice to say that it is a debatable matter.

Be that as it may, many notifications have been issued today seeking to substitute the words, figures and letters “section 11AB” with “section 11AA” and thus correcting a long pending job.

These notifications are 8/2012-CE(NT), 10/2012-CE(NT), 11/2012-CE(NT), 13/2012-CE(NT), 14/2012-CE(NT), 15/2012-CE(NT), 16/2012-CE(NT) & 18/2012-CE(NT), all dated 17 th March, 2012.

Prominent among the beneficiaries are rule 14 of the CCR, 2004 and rule 8 of the CER, 2002.

What happens during the intervening period from 08.04.2011 to 16.03.2012 is anybody's guess!