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2010 (1) TMI 352 - AT - Central ExciseInterest- The appellants states that at the material time the rate of interest for delay in payment of duty was prescribed as 15% for the first period and 13% for the later period, under Section 11AB of the Central Excise Act, 1944. However, the authorities below have demanded interest at 24%, applying provisions of Rule 8(3) of the Central Excise Rule, 2002. Held that- when assessee defaults in payment of duty, there is delay in payment. Cases of default and delay are one and the same. Interest at higher rate than that provided under section 11AB cannot be prescribed under subordinate rules as held by precedents. The appeal is allowed.
Issues:
1. Discrepancy in the rate of interest for delay in payment of duty under Section 11AB and Rule 8(3) of the Central Excise Rule, 2002. 2. Validity of Rule 8(3) in prescribing a higher rate of interest than Section 11AB for default in payment of duty. Analysis: 1. The appellant argued that the authorities demanded interest at 24% for delay in payment of duty, contrary to the prescribed rates of 15% and 13% under Section 11AB for different periods. Citing previous decisions, the appellant contended that Rule 8(3) prescribing a higher rate of interest was ultra vires. 2. The JCDR representing the respondent contended that Section 11AB applies to delay in payment, while Rule 8(3) addresses default in payment of duty. Therefore, both provisions should be considered valid as they cater to distinct situations. 3. The tribunal found that default in payment of duty results in a delay in payment, making the situations interconnected. Relying on previous judicial decisions, the tribunal held that interest rates higher than those specified under Section 11AB cannot be imposed through subordinate rules. Consequently, the tribunal set aside the order demanding interest exceeding the prescribed rates, directing the appellants to pay interest at the specified rates within four weeks. The appeal was allowed, and the stay petition was also granted.
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