Court upholds decision not to charge interest pre-Finance Bill, 2001 due to duty payment timing

The High Court dismissed the Central Excise Appeal, affirming the Tribunal's decision not to levy interest on delayed duty payment due to the duty becoming payable before the Finance Bill, 2001 received presidential assent. The appellant's argument for charging interest under Rule 49 was rejected as the respondent voluntarily paid the differential duty without a demand notice, leading to interest being charged under Section 11AB(2) instead. The Court upheld the Tribunal's decision based on the insignificance of the amount involved, deeming court intervention unnecessary.

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Issues involved: Central Excise Appeal u/s 35G of the Central Excise Act, 1944 against the order of the Customs, Excise & Service Tax Appellate Tribunal regarding the levy of interest on delayed payment of duty.

Summary:
The respondent-assessee, engaged in the manufacture of battery/dry cell battery, availed CENVAT facility on inputs/raw materials. Supplementary invoices were raised for clearance of Zinc Scrap to their sister unit, resulting in a differential duty payment of Rs. 3,91,723/- in December 2000 for clearances between July and October 2000. The department levied interest of Rs. 32,198/- @ 24% per annum. The Tribunal relied on Section 11AB(2) which exempts cases where duty became payable before the Finance Bill, 2001 received the assent of the President on 11-5-2001, concluding that interest was not payable for the period in question.

The appellant argued that interest could still be charged under Rule 49 of the Central Excise Rules, 1944. However, since the respondent had voluntarily paid the differential duty without a notice of demand, the interest was charged under Section 11AB(2) and not Rule 49. The Tribunal's decision to set aside the interest was upheld, considering the small amount involved and deemed it not necessary for court interference.

In conclusion, the Central Excise Appeal was dismissed by the High Court, affirming the Tribunal's decision regarding the levy of interest on the delayed payment of duty.

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