Interest on confirmed excise duty demand not leviable where fraud, collusion or wilful misstatement was not established.

Interest on a confirmed central excise duty demand under Section 11AB was held not leviable for the period in question because the applicable version of the provision was treated as limiting interest liability to cases involving fraud, collusion or wilful misstatement. As there was no finding of collusion with the employee for short payment, the statutory condition for charging interest was not satisfied, and the interest demand was set aside. The underlying duty demand was sustained.

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Issues: Whether interest was payable on the confirmed duty demand under Section 11AB of the Central Excise Act.

Analysis: The appellants accepted the duty liability, but disputed the levy of interest. The relevant version of Section 11AB applicable during the period in question was read as restricting interest liability to cases involving fraud, collusion, or wilful misstatement. In view of the finding that there was no collusion with the employee for short payment, the statutory basis for charging interest was not made out.

Conclusion: Interest under Section 11AB of the Central Excise Act was not leviable, and the liability to pay interest was set aside. The duty demand was sustained.

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