CESTAT overturns interest payment ruling on duty delay; precedent cited.

The Appellate Tribunal CESTAT, New Delhi set aside the interest payment decision by the Deputy Commissioner and Commissioner (Appeals) in a case involving the interpretation of Section 11AB(2) regarding delayed payment of duty. Relying on statutory provisions and precedent cases, the Tribunal ruled that interest on duty does not apply if duty became payable before a specific date. Consequently, the interest and penalty for non-payment of interest were revoked, and the appeal was allowed in favor of the appellant with any consequential relief as per the law.

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Issues involved: Interpretation of Section 11AB(2) u/s levy of interest on delayed payment of duty.

The judgment by the Appellate Tribunal CESTAT, New Delhi involved a case where the appellant, engaged in manufacturing battery/dry cell battery, raised supplementary invoices for clearance of Zinc Scrap to their sister unit due to a change in assessable value. A differential duty was paid, and the Department sought interest payment on the duty short paid. The Deputy Commissioner and Commissioner (Appeals) upheld the interest payment decision, which was challenged in the present appeal.

Upon considering the statutory provisions of Section 11AB(2) which state that interest on delayed payment of duty does not apply if duty became payable before a specific date, the Tribunal held that the levy of interest cannot be sustained in this case. Citing precedents such as Modern Insulators v. CCE, Jaipur-II, Narmada Chematur Petrochemicals Ltd. v. CCE, Vadodara, and Delphi Automotive Systems (P) Ltd. v. CCE, Noida, the Tribunal set aside the interest payment and consequent penalty for non-payment of interest.

As a result, the impugned order levying interest and penalty was set aside, and the appeal was allowed with any consequential relief due to the appellant as per the law. The judgment was dictated and pronounced in open court on the 27th day of November, 2008.

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