2010 (10) TMI 278 - AT - Central Excise

Demand of interest - Rate of interest - The Revenue demanded the interest at the rate of 2% per month as per Notification 12/2003-C.E. (N.T.), dated 1-3-2003 for the default period - The said Notification enhanced the rate of interest from 15% P.A. to 2% per month - the respondent paid the duty on 16-4-2003 - The Notification provides that if the assessee fails to pay the amount of duty by the due date, he shall be liable to pay the outstanding amount along with interest at the rate of 2% - This provision came into force from 1-4-2003 - Hence, amount of duty paid after the due date shall be liable for interest at the rate of 2% w.e.f. 1-4-2003 - the appeal is allowed in favour of Revenue.

Summary

Issues:
Interpretation of Notification 12/2003-C.E. (N.T.), dated 1-3-2003 regarding interest payment for delayed duty payment.

Analysis:
The case involved a dispute over the demand for interest by the Revenue at the rate of 2% per month for delayed duty payment, based on Notification 12/2003-C.E. (N.T.), dated 1-3-2003. The Commissioner (Appeals) had set aside the interest demand, stating that the notification was prospective in nature and not applicable to the respondent's case as the duty payment due date was before the notification came into force.

The Revenue contended that the notification was prospective and effective from 1-4-2003, making the interest payment applicable if the duty was not paid by the due date. As the duty in question was paid on 16-4-2003, the interest was rightfully demanded as per the notification.

The Tribunal found that the notification was indeed prospective, enhancing the interest rate from 15% P.A. to 2% per month effective from 1-4-2003. The Tribunal cited a previous case to support the view that penalty or interest provisions can apply even if introduced after the act of non-compliance. As the duty payment in this case was made after 1-4-2003, the interest was deemed payable as per the notification in force at the time of payment.

Ultimately, the Tribunal ruled in favor of the Revenue, setting aside the Commissioner (Appeals) decision and allowing the appeal. The judgment emphasized that the interest was to be paid according to the provisions of the notification in force at the time of payment, which, in this case, was Notification 12/2003-C.E. (N.T.), dated 1-3-2003.

This detailed analysis highlights the key arguments, legal interpretations, and the final decision of the Tribunal regarding the application of the notification on interest payment for delayed duty.