2014 (4) TMI 191 - AT - Central Excise

Rate of interest - Interest on delayed duty - Rule 8 of the Central Excise Rules, 2002 - Held that - Once the amended rules have come into force, they have to be given full effect and, therefore, for the period from 1.4.2003, the new rate of interest shall apply and not the rate of interest which was prevalent when the amount of duty was due - Otherwise, the entire rule becomes infructuous/otiose - interest leviable for the period from 1.4.2003 to 2.9.2003 would be at the rate prescribed in the amended provisions of sub-rule (3) of Rule 8 of the Central Excise Rules, 2002 - Decided in favour of Revenue.

Summary

Issues: Rate of interest applicable in case of default in payment of excise duty.

Analysis:
1. Background: The appeal was filed by the Revenue against the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mumbai IV. The primary issue in question was the rate of interest that would apply in case of default in payment of duty.

2. Facts of the Case: The assessee defaulted in paying excise duty for the months of February and March 2003. The due dates for payment were missed, leading to a delay in payment. The rate of interest changed with the Central Excise (Second Amendment) Rules, 2003, effective from 1.4.2003, which prescribed a new rate of interest.

3. Contentions: The Revenue contended that the new interest rate should apply to the outstanding duty amount, as per the amended provisions. The lower appellate authority, however, held that the rate of interest applicable would be as per the prevailing rate on the due date.

4. Arguments: The Addl. Commissioner (AR) for the Revenue argued that applying the new interest rate was essential to give full effect to the amended rules; otherwise, the amendment would be rendered ineffective.

5. Judgment: The Tribunal analyzed the situation and concluded that the new rate of interest introduced by the amendment should be applied for the period from 1.4.2003 onwards, not the rate prevailing on the due date. It was emphasized that statutory provisions should not be interpreted in a way that renders them ineffective. Therefore, the Tribunal set aside the lower appellate authority's decision and allowed the appeal filed by the Revenue, holding that the interest leviable would be as per the amended provisions of Rule 8 of the Central Excise Rules, 2002 for the relevant period.

This detailed analysis of the judgment highlights the key issues, arguments, and the ultimate decision made by the Tribunal regarding the rate of interest applicable in cases of default in payment of excise duty.