Collection of Interest on delay payment from customer

[Vivek anandhan]

Dear experts,

We are the manufacturer of Excisable goods and are collecting interest through debit note from our customer on account of delay payment for our Excise duty suffered goods.

Whether we need to collect service tax or excise duty for said interest amount.

Vivekanandhan

Sunbeam

AI Summary

Interest on Delayed Payments Not Part of Assessable Value; No Excise or Service Tax Applicable Under Central Excise Act, 1944. A manufacturer of excisable goods inquired about the tax implications of collecting interest on delayed payments from customers. An expert clarified that such interest is not considered additional consideration under the Central Excise Act, 1944, and therefore does not require the inclusion in the assessable value for excise duty. Additionally, collecting interest on delayed payments is not regarded as a service provision, so service tax is not applicable. Another participant confirmed this interpretation, and the inquirer expressed appreciation for the clarity provided.