Petitioner liable for interest on excise duty, rate to align with law

The court upheld the petitioner's liability to pay interest on delayed excise duty payment but ordered a redetermination of the interest amount to align with the maximum rate specified in the departmental notification and relevant law. The writ petition was disposed of without imposing costs.

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Issues:
Challenge to adjudication order for interest on delayed payment of excise duty.

Analysis:
The petitioner's factory was registered with the Central Excise Department as a tea manufacturer, challenging the adjudication order for interest on delayed payment of additional duty of excise. The demand notice issued by the Superintendent demanded Rs. 2,17,690 for central excise duty for clearances made during a specific period. The petitioner deposited the excise duty but faced a proceeding for delayed payment interest. The petitioner argued that interest charged at Rs. 1000 per day was impermissible under a specific notification.

The standing counsel for the Central Excise Department argued that the liability to pay additional excise duty was settled by a previous court decision. The petitioner was rightly charged interest for delayed payment under the Central Excise Act. The duty was deposited after the due date, triggering interest liability under Section 11AA of the Act. The rate of interest was fixed at 24% per annum by a notification dated May 12, 2000, under Section 11AA.

The court found that the interest demanded at a much higher rate than specified in the notification was inconsistent with the provisions of Section 11AA and the notification itself. The court upheld the petitioner's liability to pay interest but ordered a redetermination of the interest amount to align with the maximum rate specified in the departmental notification and Section 11AA of the Central Excise Act. The writ petition was disposed of with this direction, without imposing any costs.

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