Mandatory interest on delayed duty payments under the fortnightly scheme bars stay of interest recovery, while penalty relief may still be granted.

Interest is mandatory on delayed payment of duty under the fortnightly payment facility in Rule 8(3) of the Central Excise Rules, 2002, so recovery of the interest amount was not stayed. Pre-deposit under Section 35F does not extend to interest amounts, making waiver of pre-deposit for interest unnecessary. Relief on the penalty component was available on the facts, so waiver and stay were granted for penalty while refused for interest.

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Issues: (i) whether interest was payable on belated payment of duty under the fortnightly payment facility; and (ii) whether pre-deposit and stay could be granted in respect of the interest and penalty amounts.

Issue (i): whether interest was payable on belated payment of duty under the fortnightly payment facility.

Analysis: The assessee had been availing fortnightly payment of duty under Rule 8(3) of the Central Excise Rules, 2002 and had delayed payment for certain fortnights. The liability to pay interest on delayed duty payment under the rule was treated as mandatory, leaving no valid ground to resist the demand of interest.

Conclusion: Interest on the delayed duty payment was held payable and the request for stay of recovery of the interest amount was rejected.

Issue (ii): whether pre-deposit and stay could be granted in respect of the interest and penalty amounts.

Analysis: The request for waiver of pre-deposit of interest was found unnecessary because Section 35F did not require pre-deposit of any amount towards interest. As regards the penalty amount, relief was considered available on the facts presented.

Conclusion: Waiver of pre-deposit in respect of interest was treated as unnecessary, and waiver and stay were granted for the penalty amount.

Final Conclusion: The application succeeded only in part, with relief granted on the penalty component but refused on the interest component.

Ratio Decidendi: Interest on delayed duty payment under the fortnightly payment scheme is mandatory, and pre-deposit under Section 35F does not extend to interest amounts.

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