Interest on delayed payment of duty

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

1. Jayaswal Neco LTD vs Commnr. of Central Excise, Raipur

   Supreme Court of India 06 Aug 2015 Binding (SC) - Landmark Reportable

   Court's Decision & Legal Precedent

   When the facility for fortnightly installment payment of excise duty is suspended under Rule 173G(1)(e) of the Central Excise Rules, 1944, the suspension restricts only the manner of payment (from fortnightly to daily basis) and not the mode of payment. Consequently, excise duty can be validly discharged during such suspension period through either account current (cash) debit or through utilization of Cenvat Credit, as both modes are explicitly recognized in Rule 173G(1)(b). Payment through Cenvat Credit constitutes valid and complete discharge of duty liability and does not amount to non-payment attracting interest liability, as Cenvat Credit under the Modvat scheme is 'as good as tax paid' and operates as an independent scheme with its own framework. The language in Rule 173G(1)(e) mandating payment "by debit to the account current" does not create an exclusive or prohibitive mandate excluding Cenvat Credit, particularly in the absence of specific prohibition, and must be read consistently with the recognition of Cenvat Credit as a valid mode in Rule 173G(1)(b). Therefore, interest under Rule 173G(1)(d) or Section 11AA is not chargeable for payment made through Cenvat Credit during a suspension period.

   On this section: Section 11AA provides for interest liability on delayed payment of duty determined under Section 11A, at the rate not below 18% and not exceeding 36% per annum as fixed by Central Government notification

   Read the full order on eCourts India

2. Commr. of Cen. Excise vs International Auto LTD

   Supreme Court of India 08 Jan 2010 Binding (Supreme Court) Reportable Civil Appeal No. 225 Of 2010

   Court's Decision & Legal Precedent

   Under the amended scheme of Sections 11A, 11AB of the Central Excise Act, 1944 as amended by Act 14 of 2001 and Act 32 of 2003, interest under Section 11AB is leviable on differential excise duty arising from retrospective price revisions in supply contracts, regardless of whether such understatement of value and short-levy of duty at the time of removal was unintentional or committed without fraudulent means. The leviability of interest is premised on the principle that interest compensates the government for loss of revenue on delayed payment of duty. When goods are cleared at prices later revised upward retrospectively, the goods carried a higher value at the time of clearance and were cleared on short-payment of duty, and such short-payment must be treated as having occurred at the time of removal, not at the time supplementary invoices are issued.

   On this section: Relates to penalty; penalty is attracted only in cases where non-payment or short-payment is by reason of fraud, collusion, wilful misstatement, or suppression of facts with intent to evade duty

   Read the full order on eCourts India

3. Commissioner of Central Excisae Vapi vs Kraftech Products INC

   Supreme Court of India 14 Mar 2008 Binding (SC) 2008 (215) E.L.T. 327 (S.C.)

   Court's Decision & Legal Precedent

   Rule 34(b) of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977 applies to multi-piece packages containing commodities, and if the commodities are sold by weight or measure and the combined net weight of all pieces in the multi-piece package is 10 grams or less, the manufacturer is exempt from the requirement to declare Retail Maximum Price and is not subject to Section 4A of the Central Excise Act, 1944; instead, valuation under Section 4 applies. The combined weight should be considered for determining applicability of the Rule 34(b) exemption because Rule 2(j)'s illustration explicitly directs consideration of combined net weight for determining the applicability of the rules.

   On this section: Provides for charging and recovery of interest on outstanding excise duty; mentioned in context of potential liability on manufacturers

   Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.