Interest on removed inputs is not payable when the duty-equivalent amount is paid within the prescribed Rule 8 time limit.

Interest under Section 11AB was not recoverable on removal of inputs as such where the amount equal to credit availed was paid within the time prescribed by Rule 8 of the Cenvat Credit Rules, 2002. The substituted Rule 3(4) required payment of that amount on removal, but read with Rule 8(1) the duty became payable by the 5th day of the following month, and for March removals by 31 March. As payment was made before the statutory due date, there was no delay and no basis to demand interest merely because the removal had occurred earlier.

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Issues: Whether interest under Section 11AB of the Central Excise Act, 1944 was recoverable for removal of inputs as such when the duty amount was paid within the time prescribed by Rule 8 of the Cenvat Credit Rules, 2002, having regard to Rule 3(4) as substituted by Notification No. 13/2003-CE(N.T.) dated 01.03.2003.

Analysis: Rule 3(4) of the Cenvat Credit Rules, 2002, as substituted, required payment of an amount equal to the credit availed when inputs or capital goods were removed as such. Read with Rule 8(1), the duty became payable by the 5th day of the following month, and for March removals by 31st March. The expression "on the date of such removal" in the earlier version did not govern the substituted provision. On the admitted facts, the assessee had paid the duty before the statutory due date, so there was no delay in payment attracting interest under Section 11AB.

Conclusion: Interest was not leviable, and the Revenue's appeal failed.

Ratio Decidendi: Where duty on inputs removed as such is paid within the time prescribed under Rule 8, no delay arises and interest under Section 11AB cannot be demanded merely because the removal occurred earlier.

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