Rule 8(3) interest on delayed central excise duty follows the amended rate, with unpaid duty remaining enforceable until payment.

On default in payment of central excise duty, the amended Rule 8(3) of the Central Excise Rules applies and prescribes interest at 2% per month or Rs. 1,000 per day, whichever is higher, from the day after the due date until payment. The text notes that adopting 24% per annum is inconsistent with the amended rule. It also states that unpaid duty remains enforceable where duty and interest are outstanding, and that the duty demand was therefore treated as sustainable in light of the default and interest liability.

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Issues: (i) Whether, on default in payment of duty, interest was chargeable under Rule 8(3) of the Central Excise Rules at 24% per annum or at 2% per month or Rs. 1,000 per day, whichever was higher; (ii) Whether the duty demand confirmed by the original authority was required to be sustained.

Issue (i): Whether, on default in payment of duty, interest was chargeable under Rule 8(3) of the Central Excise Rules at 24% per annum or at 2% per month or Rs. 1,000 per day, whichever was higher.

Analysis: The amended Rule 8(3) prescribed that where an assessee failed to pay duty by the due date, the outstanding amount was liable to interest at 2% per month or Rs. 1,000 per day, whichever was higher, from the first day after the due date until payment. The second proviso further treated goods in respect of which duty and interest remained unpaid as having been cleared without payment of duty. The lower appellate authority's adoption of 24% per annum was therefore inconsistent with the amended rule.

Conclusion: The interest rate of 24% per annum was incorrect and interest was payable at 2% per month or Rs. 1,000 per day, whichever was higher.

Issue (ii): Whether the duty demand confirmed by the original authority was required to be sustained.

Analysis: Since the Commissioner (Appeals) had upheld the duty demand but set aside the original authority's order confirming it and allowed the assessee's appeal, the duty demand required restoration in light of the correct legal position on default and interest liability.

Conclusion: The duty demand was required to be sustained.

Final Conclusion: The impugned order was set aside and the Revenue's challenge succeeded on both the rate of interest and the sustainability of the duty demand.

Ratio Decidendi: On default in payment of central excise duty, the amended Rule 8(3) governs the interest liability, and the duty demand remains enforceable until the outstanding duty together with applicable interest is paid.

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