Delayed excise duty interest must run on unpaid duty until actual payment, without reducing the base for CENVAT credit.

Interest on delayed central excise duty under Rule 173G(1)(d) was construed literally as payable on the outstanding duty from the day after the due date until actual payment. Available CENVAT credit was not treated as actual payment on the relevant date, and the provision did not permit reducing the interest base by reference to that credit balance. The reducing-balance method was rejected, and interest was required to be computed on the full unpaid duty until discharge.

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Issues: Whether interest for delayed payment of central excise duty under Rule 173G(1)(d) of the Central Excise Rules, 1944 is to be computed on the outstanding duty alone up to the date of actual payment or on a reducing balance after taking into account available CENVAT credit.

Analysis: The rule was read literally and treated as unambiguous. The liability created by the provision is to pay the outstanding duty along with interest at the prescribed rate from the first day after the due date until actual payment. Available CENVAT credit was held not to amount to actual payment on the relevant date, and the provision did not permit reduction of the interest base by reference to the credit balance. The plea for a reducing-balance method was therefore rejected.

Conclusion: The interest had to be calculated on the outstanding duty till actual payment, without reducing it by the CENVAT credit balance, and the finding against the assessee was upheld.

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