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

Collection of interest on delayed payment is not part of assessable value and does not attract excise duty; service tax applies only to separate service charges.
Collection of interest for delayed payment on supply of excisable goods does not form part of assessable value for central excise and is not liable to excise duty; interest recovered is post-transaction compensation. Interest alone does not constitute a taxable service, though separately charged service or collection fees would attract service tax.