Tribunal sets aside interest demand, rules on correct rate, aligns with High Court interpretation.

The tribunal set aside the demand for interest at Rs.1,000/- per day, allowing the appeal and holding that the interest already paid at 24% per annum satisfied the Revenue's demand under Rule 8(3), consistent with the Rajasthan High Court's ruling. The decision clarified the correct rate of interest applicable on delayed duty payments, aligning with the judicial interpretation provided by the High Court.

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Issues:
Interpretation of Rule 8 of the Central Excise Rules, 2002 regarding the rate of interest on delayed duty payment.

Analysis:
The appellants, engaged in manufacturing excisable goods, faced a demand for interest on delayed duty payment for four months in 2003-04. The lower authorities sought interest at the rate of Rs.1,000/- per day under Rule 8(3), but the appellants argued they were only liable to pay interest at 24% per annum. They relied on the Rajasthan High Court's decision in Lucid Colloids Ltd. v. Union of India, where the provision for charging interest at Rs.1,000/- per day was deemed unconstitutional. The department, in a counter-affidavit, acknowledged the High Court's decision and accepted that interest should be charged at 2% per month (24% per annum). The appellants had already paid interest at 2% per annum on the belated duty amount, supported by relevant challans.

The tribunal set aside the demand for interest at Rs.1,000/- per day, allowing the appeal and holding that the interest already paid at 24% per annum satisfied the Revenue's demand under Rule 8(3), consistent with the Rajasthan High Court's ruling. The decision clarified the correct rate of interest applicable on delayed duty payments, aligning with the judicial interpretation provided by the High Court.

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