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2014 (10) TMI 22 - AT - Central ExciseDelayed payment of duty - Rule 8(3) of central excise rules, 2002 - department has calculated interest as per Rule 8 (3) at the rate of ₹ 1000/- per day which is equivalent to the duty determined under Rule 8(3) - Held that - Division Bench of this Tribunal in the case of Elastolan Engineers Pvt. Ltd. (2007 (5) TMI 431 - CESTAT, KOLKATA) has dealt with the similar issue and held that assessees are not liable to pay interest in excess of the amount notified under Section 11AB for the delayed period of payment of duty. This Bench of the Tribunal in the case of Kanagadurga Clothers Pvt. Ltd. (2010 (1) TMI 352 - CESTAT, CHENNAI), taking into consideration the ratio laid down in the cases of Elastolan Engineers Pvt. Ltd. (supra) and Lucid Colloids Ltd. (2005 (8) TMI 134 - HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR) has held that interest on delayed payment would be payable as per Section 11AB. - Appellant is liable for payment of interest on the delayed payment for the disputed period as provided under Section 11AB of Central Excise Act i.e. 13 % per annum. Accordingly, the impugned order is modified to the extent of charging interest @ 13% per annum as provided under Section 11AB and I uphold the penalty. - Decided partly in favor of assessee.
Issues:
Leviability of interest on delayed payment of duty. Analysis: The appeal concerns the imposition of interest on delayed payment of duty by the appellants for the period July 2004 to October 2004. The department issued a show cause notice demanding interest under Section 11A read with Rule 8 of Central Excise Rules, 2002, along with a penalty. The adjudicating authority confirmed the interest demand and imposed a penalty. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal. The appellant argued that interest should be calculated as per Section 11AB of the Central Excise Act, which prescribes a lower rate than Rule 8 (3) of the Central Excise Rules. The appellant relied on various tribunal decisions to support their argument that interest should not exceed the rates specified under Section 11AB. The Revenue, on the other hand, contended that Rule 8 (3) of the Central Excise Rules is independent of Section 11AB and allows for a higher rate of interest. They cited amendments to the rule and relied on judgments from the Hon'ble Rajasthan High Court and other tribunal decisions to support their position that interest at 2% per month is applicable on delayed duty payments. After hearing both sides, the Tribunal noted that the issue revolved around the calculation of interest on delayed payments. The Tribunal observed that subsequent to a judgment by the Hon'ble Rajasthan High Court, the government amended the rules to align with the original provisions introduced in 2002. The Tribunal also considered the discrepancy in interest rates between Rule 8 (3) and Section 11AB. Referring to previous tribunal decisions, the Tribunal held that interest on delayed payment should not exceed the rates prescribed under Section 11AB. Therefore, the Tribunal modified the order to charge interest at 13% per annum as provided under Section 11AB and upheld the penalty imposed. The appeal was allowed in these terms. In conclusion, the Tribunal clarified the applicable interest rate on delayed duty payments, emphasizing adherence to the rates specified under Section 11AB of the Central Excise Act and setting aside the higher rate calculated under Rule 8 (3) of the Central Excise Rules.
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