Notified interest rate on delayed duty payment controls, while a penalty without reasons cannot be sustained.

Interest on delayed central excise duty payment was required to be charged at the notified rate under Section 11AB read with Notification No. 66/2003-C.E.; the adjudicating authority could not apply any different rate beyond the statutory notification, so interest was confined to 13%. The penalty could not be sustained because the adjudication order contained no reasoning or finding explaining why it was leviable; accordingly, the penalty was set aside. The order was modified to align interest with the notification and to remove the unsupported penalty.

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Issues: (i) whether interest on the defaulted amount of duty was payable at the rate notified under Notification No. 66/2003-C.E. or at any different rate; (ii) whether the penalty of Rs. 10,000 could be sustained in the absence of any reasoning in the adjudication order.

Issue (i): interest on delayed payment of duty was governed by Section 11AB of the Central Excise Act, 1944, under which the rate of interest lay within the statutory range and was to be fixed by the Central Government by notification. Once the notified rate had been issued, the adjudicating authority could not travel beyond that statutory mandate.

Conclusion: the interest on the defaulted amount of duty was to be charged at 13% in terms of the notification, and not at any different rate.

Issue (ii): the adjudication order contained no reason or discussion explaining why penalty was leviable. In the absence of any finding justifying the levy, the penalty could not be sustained.

Conclusion: the penalty was waived.

Final Conclusion: the order was modified to confine interest to the notified rate and to set aside the penalty, resulting in relief to the appellant on both issues.

Ratio Decidendi: where the statute prescribes interest on delayed duty payment within a notified range, the adjudicating authority must apply the notified rate and cannot impose an arbitrary different rate; a penalty cannot stand without a reasoned finding supporting its levy.

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