WAIVER OF INTEREST IN CASE OF SHORT PAYMENT OF DUTY/SERVICE TAX

[RAM SHARMA]

Dear Experts,

As per Sec 11AA of CEA,1944 the interest has to be paid whether the relevant payment is ade voluntarily or after determination of the amount of duty under section 11A . in the same section there is a proviso that talks about waiver of interest in case of payment of duty within 45 days of order . i cant relate this proviso with the section . it confuses me regarding the point that 11AA interest is itself compulsory then how can lawmakers talk about its waiver in proviso ? please enlight me with proper interpretation . 

Thanks

[YAGAY andSUN]

This subsection (3) of the Section 11AA can't be read in isolation, it should be read alongwith the Section 37B of the CEA.

Since, the nature of interest is Statutory, hence it is mandatory to pay, in the event of any voilation of provisions of CE Laws where duty element is involved untill unless it pertain to order 37B.

AI Summary

Statutory interest under Section 11AA may be waived where duty is paid within the 45 day proviso read with Section 37B. Mandatory statutory interest arises on short payment of central excise duty or service tax, but a proviso permits waiver of that interest where the duty is paid within the specified short period following an assessment order; the subsection imposing interest must be read together with the related waiver provision to determine whether the waiver applies.