2007 (6) TMI 376 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 8(3) of Central Excise Rules regarding interest rate on defaulted duty payment.

Analysis:
The judgment deals with an appeal by the Revenue against the order of the Commissioner (Appeals) regarding the interest rate chargeable during a period when the respondents defaulted in payment of duty. The Revenue contended that the interest rate should have been as per Rule 8(3) of Central Excise Rules, which was amended by Notification 12/2003. The amended rule prescribed an interest rate of 2% per month or Rs. 1,000 per day, whichever is higher, for defaulted duty payment starting from the first day after the due date. The Tribunal agreed with the Revenue's contention, stating that the lower appellate authority's decision to levy interest at 24% per annum was incorrect. The Tribunal held that the correct interest rate should be 2% per month or Rs. 1,000 per day, as per the amended rule.

Furthermore, the Tribunal also addressed the issue of duty demand. While the Commissioner (Appeals) had upheld the duty demand against the respondents, they had set aside the order of the original authority that confirmed the demand and allowed the appeal of the assessee. The Tribunal confirmed that the duty demand needed to be sustained, in line with the Revenue's contention. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the Revenue.

In conclusion, the Tribunal's judgment clarified the correct interest rate applicable for defaulted duty payments as per the amended Rule 8(3) of Central Excise Rules. Additionally, the Tribunal upheld the duty demand against the respondents, overturning the decision of the Commissioner (Appeals) and confirming the Revenue's contention in this regard.