2013 (10) TMI 54 - HC - Central Excise

Rate of Interest The assessee defaulted on three occasions in payment of duty due and eventually paid the amount along with interest at the rate of 15% in terms of Rule 8(3) of the Central Excise Rules, 2002 read with Notification No. 19/2002-C.E. Held that - The Commissioner (Appeals) and the CESTAT held that the rate of interest prevailing as on the date of default will be taken and that the new rate introduced by the amendment to Rule issued vide the Notification No. 12/2003 and w.e.f 1-4-2003 will be applicable to the defaults which occurred after 1-4-2003 there was no error of law in the reasoning concurrently arrived at by the Commissioner (Appeals) and the CESTAT warranting consideration of this appeal, since no substantial question of law arises for consideration.

Summary

Issues:
Interpretation of rate of interest for default in duty payment under the Customs Act, 1962.

Interpretation of Rate of Interest:
The appeal by the Revenue under Section 35(G) of the Customs Act, 1962 challenged the order of the CESTAT, which confirmed the order-in-Appeal passed by the Commissioner of Customs and Central Excise Appeals-III. The respondent-assessee defaulted on duty payment in June and July 2002, clearing the dues in installments from December 2003 to March 2004 with interest. The Revenue contended that the interest rate was enhanced to 24% per annum from 15% after 1-3-2003 as per Notification No. 12/2003. However, both the Commissioner (Appeals) and the CESTAT held that the rate of interest applicable is the one prevailing at the time of default. They ruled that the new rate introduced by the amendment to Rule via Notification No. 12/2003 would apply only to defaults occurring after 1-4-2003. The High Court concurred with this interpretation, finding no error in the reasoning provided by the lower authorities. The judgment dismissed the appeal at the admission stage, stating no substantial question of law arises for consideration in this matter.

This judgment clarifies the crucial aspect of determining the rate of interest for defaults in duty payment under the Customs Act, 1962. It emphasizes that the interest rate applicable is the one prevailing at the time of default, not the rate introduced by subsequent amendments. The decision underscores the importance of adhering to the legal provisions in force at the time of the default occurrence. The High Court's affirmation of the lower authorities' interpretation provides clarity and consistency in applying the relevant provisions of the law. This judgment serves as a precedent for similar cases involving the calculation of interest rates for duty payment defaults, ensuring a uniform approach in resolving such disputes within the legal framework.