2008 (1) TMI 320 - AT - Central Excise

Whether interest on the defaulted amount of duty shall be payable @ of 13% as informed under Notification No. 66/2003-C.E., dated 12-9-2003 or at any different rate that was contemplated in the order of adjudication held that rate of interest will be @ 13% as notified by the Central Govt. in the notification - there is no reasoning in the order calling for penalty, so penalty levied is waived

Summary

Issues:
- Whether interest on the defaulted amount of duty shall be payable at the rate of 13% as per Notification No. 66/2003-C.E., dated 12-9-2003 or at a different rate as contemplated in the order of adjudication.
- Whether the penalty of Rs. 10,000 should be waived.

Analysis:
1. Interest Rate Dispute:
The appeal before the Appellate Tribunal involved a question regarding the applicable rate of interest on a defaulted duty amount. The appellant argued that the interest rate should be as per Notification No. 66/2003 dated 12-9-2003, which specified 13%, and not at any arbitrary rate. The counsel contended that the penalty of Rs. 10,000 was imposed without proper discussion or conclusion on the necessity of such penalty. On the other hand, the JDR for the Revenue acknowledged that the statutory mandate should determine the interest rate, and the rate applied under Rule 83 of the Central Excise Rules, 1944 was appropriate since there was no interest levy under Section 11AB of the Central Excise Act, 1944.

2. Judgment on Interest Rate:
After hearing both sides and examining the records, the Tribunal found that while there was a default in payment, the authorities had exceeded the statutory mandate by not adhering to the prescribed interest rate under Notification No. 66/2003. Section 11AB of the Central Excise Act, 1944 mandated interest on delayed duty payment, with a specified minimum and maximum rate, allowing the Central Government to notify the applicable rate in between. As the government had fixed the rate at 13%, the Tribunal directed the payment of duty with interest at this rate for the default period, stating that it would serve the ends of justice.

3. Penalty Waiver:
Regarding the penalty imposed without proper reasoning or justification in the order, the Tribunal noted the absence of any explanation or basis for the penalty levy. Consequently, the Tribunal deemed the penalty to be irrational and waived it in the interest of justice. The appeal was allowed on the terms specified, with the interest rate set at 13% as per the notification and the penalty being waived.

In conclusion, the Appellate Tribunal ruled in favor of the appellant, directing the payment of the defaulted duty amount with interest at the rate specified in Notification No. 66/2003 and waiving the penalty due to lack of reasoning for its imposition.