Delayed duty payment interest is not refundable where later-accrued Cenvat credit was wrongly used for an earlier duty period.

Refund of interest paid for delayed duty payment was held inadmissible where Cenvat credit accrued in a later month was wrongly used to discharge duty for an earlier fortnight, causing short payment. The text explains that such utilisation was impermissible under Rule 57AB(1)(b) of the Central Excise Rules, 1944, and the short-paid duty was later made good with interest. Interest paid under Rule 173G(1)(d) was treated as payable for delay in meeting the due date, and the assessee's reliance on cases involving Section 11AA read with Section 11A(2) was found inapplicable because no such determination had been made here.

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Issues: Whether refund of interest paid for delayed payment of duty was admissible when Cenvat credit was wrongly utilised for payment of duty of an earlier fortnight and the interest was paid under Rule 173G(1)(d) of the Central Excise Rules, 1944.

Analysis: The utilisation of credit that had accrued only in the succeeding month for payment of duty of the earlier fortnight was not permissible under Rule 57AB(1)(b) of the Central Excise Rules, 1944, resulting in short payment of duty. The short-paid amount was subsequently made good along with interest. The provision governing interest, Rule 173G(1)(d) of the Central Excise Rules, 1944, expressly required payment of interest where duty was not paid by the due date. The decisions relied upon by the assessee were held inapplicable because they concerned interest demanded under Section 11AA of the Central Excise Act, 1944 following a determination under Section 11A(2) of the Central Excise Act, 1944, which was not the situation here.

Conclusion: Refund of the interest was not admissible, and the rejection of the refund claim was /confirmed in favour of Revenue.

Ratio Decidendi: Where duty is short-paid because of impermissible utilisation of later-accrued Cenvat credit, interest paid under the specific charging provision for delayed payment is not refundable merely because no determination under Section 11A(2) of the Central Excise Act, 1944 was made.

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