2007 (5) TMI 431 - AT - Central Excise

Interest - Quantum of - Penalty - SSI unit - Duty paid belatedly with interest - Held that - the appellants are not liable to pay interest in excess of the amount notified under Section 11AB for the impugned period - The provisions of the Rules to the extent contrary to the provisions of statute i.e. Section 11AB read with the Notification issued thereunder are clearly ultra vires the provisions of the Act - appeal allowed in part

Summary

Issues:
1. Calculation of interest under Rule 8(3) of the Central Excise Rules, 2002.
2. Imposition of penalty for contravention of payment rules.

Analysis:
1. The appellant, a small-scale unit, did not pay part of the duty on time but paid the duty-amount with interest as per Section 11AB. However, a higher interest amount was demanded under Rule 8(3) of the Central Excise Rules, which required payment of interest at a higher rate. The Tribunal held that the appellants are not liable to pay interest exceeding the amount specified under Section 11AB. The Rules conflicting with the statute are ultra vires the Act. The impugned order was modified to direct the appellants to pay interest as per Section 11AB, and the amount already paid by them was to be adjusted against the interest liability calculated under Section 11AB with the Notification issued thereunder.

2. Regarding the penalty imposed on the appellants for not paying the duty-amount on time, the Tribunal considered the financial difficulties faced by the small-scale unit. It was noted that the benefit accrued to them by the late payment was neutralized by the payment of interest. Therefore, the penalty was reduced from Rs. 10,000 to Rs. 2,000. The appeal was partly allowed on these grounds, and the decision was pronounced in the open court by Member (T) Chittaranjan Satapathy.