Interest under excise rules is separate from duty; when underlying duty is nil, no interest can be levied or referred.

Interest under Rule 49A was treated as distinct from duty under Section 3 of the Central Excises and Salt Act, 1944, and not as a component of the charging levy. Because the underlying duty on yarn was nil, the interest calculated as a percentage of that duty also became nil, leaving nothing actually leviable or capable of waiver under Rule 13. On that basis, the Tribunal held that the reference application was misconceived and that no referable question of law arose for the High Court under Section 35G. The Collector's claim therefore failed.

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Issues: Whether interest leviable under Rule 49A on yarn duty was part of the duty chargeable under Section 3 of the Central Excises and Salt Act, 1944, and whether any referable question of law arose for reference to the High Court under Section 35G.

Analysis: The reference application was held to be misconceived because the Tribunal's earlier order had not proceeded on the footing that interest was part of duty. The reasoning accepted that where duty on yarn was nil, the interest, being expressed as a percentage of the duty leviable, also became nil. Rule 13 was found inapplicable because there was no interest actually leviable to waive. The distinction between duty under Section 3 and interest under Rules 49 and 49A was affirmed, and the Tribunal held that interest is not a component of duty. In that view, no question arose from the earlier order requiring clarification by the High Court.

Conclusion: The reference application was rejected and the Collector's claim failed.

Final Conclusion: The Tribunal concluded that interest under Rule 49A is distinct from duty under Section 3, and since no interest was leviable in the facts of the case, no referable question of law arose.

Ratio Decidendi: Interest levied under the Central Excise Rules as a percentage of duty does not become part of the duty under the charging section, and where the underlying duty is nil, no interest can be levied.

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