2017 (8) TMI 997

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....y imposed under Rule 25 of the Central Excise Rules, 2002. 4. On perusal of the appeal records, I find that the appellants in their grounds of appeal have mentioned that the delay in payment of Central Excise duty was due to acute financial condition of the appellants and there was no mala fide intention on their part for delaying the payment of duty. They prayed for setting aside the penalty and further prayed that the interest for delay of payment of duty is required to be paid under Section 11AB. It is also mentioned that the appellants have calculated the amount of interest which comes to Rs. 50,397/- and they have already paid the same.I find that this issue of interest have been decided by the Hon ble High Courts in the following c....

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....ate of interest @ 2% p.m. interest or 24% per annum, the charge of interest cannot be made payment of interest at monthly rates. Interest rate @ 2% per month can only be read as 24% per annum. Providing alternative levy of interest Rs. 1,000/- per day, if it is higher than the interest chargeable at the rate prescribed, is clearly by way of penalty and contrary to enabling power conferred on Rule Making Authority under Section 11AB of the Act. 11. Section 11AB clearly relates to charge of rate of interest related to amount in default for the period, the assessee remains in default of payment. Permitting charge of interest at the rate of Rs. 1,000/- per day is not computable in relation to amount of Duty in default. Whether Rs. 1,00,000/-....

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....s notified by the State Government in terms of the Section 11BC, which is between the permissible limits in terms of Section 11AB. Consequently, the demand notices are quashed and interest on delayed payment has to be recomputed only to the extent it is referred to the rate of interest @ 2% per month or 24% per annum under Rule 8(3)." 6. The abovesaid decision was followed by the Gujarat High Court in the case of K.C. & Sons Appliances Pvt. Ltd. v. Union of India reported in 2014 (306) E.L.T. 249 (Guj.). 7. We are in respectful agreement with the abovesaid decisions. Accordingly, Rule 8(3) of the Central Excise Rules in respect of levy of interest at the rate of Rs. 1,000/- per day is held to be invalid. Consequently, the demand raise....