Interest on differential excise duty denied where valuation error, not suppression with intent to evade, was shown.

Interest under Section 11AB of the Central Excise Act was held not sustainable for the disputed period because the short payment arose from a valuation error in captively consumed goods, not from established suppression with intent to evade duty. The differential duty had been paid promptly after scrutiny of records, and the show-cause notice did not disclose material supporting deliberate evasion. The Tribunal treated the matter as a valuation dispute and found the interest rationale applicable to cases of proven evasion inapplicable, particularly for a period prior to 11-5-2001.

---

---

Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 was leviable on the differential duty paid for the disputed period, and whether the facts disclosed suppression with intent to evade duty.

Analysis: The dispute concerned short-paid duty arising from valuation of captively consumed goods under the amended valuation rules. The differential duty was paid promptly after scrutiny of the records, whereas the demand for interest was raised much later. The show-cause notice did not disclose material showing deliberate suppression with intent to evade duty. In the circumstances, the case was treated as one of valuation error rather than evasion, and the reasoning that supported interest in cases of established evasion was held inapplicable. The Tribunal also noted that the relevant period was prior to 11-5-2001, when the Finance Bill, 2001 received Presidential assent.

Conclusion: Interest under Section 11AB was not sustainable for the disputed period, and the assessee succeeded.

---