Brief of the case:
- The Hon’ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills held that if the charging section of the Act do not provide for levy of interest on late payment of duty then the rules though made thereunder could not be enforced to levy and demand interest as such . And if the rules sought to levy interest without corresponding provision of charging interest in the provision of the Act, such rules are liable to be set aside as being ultra- vires the provisions of the Act.
- Therefore, in the present case since the charging section 3A of the Central Excise Act do not provide levy of interest on delayed payment of duty under compounded levy scheme , the rule 96ZP made under it providing such levy of interest is ultra-vires of the Act and was liable to be set aside.
Facts of the case:
- The assessee was engaged in the manufacture of rerolled non-alloyed steel products with the help of rolling mill taken on lease for the period from 1997 to 2000.The assessee opted to pay duty under the compounded levy scheme introduced from 01.09.1997.
- On expiry of lease period, assessee surrendered its registration certificate. On 19.08.2005, assessee was served notice demanding interest on delayed payment of duty for the period 1997-2000. The assessee challenged such demand on the ground that the rules framed under compounded levy scheme did not provide for any interest payable on delayed payment. However, assessee did not raise such ground upto the high court level and rather otherwise challenged the validity of such interest demand on the ground that the empowering section was omitted in year 2001 and for that reason no demand can be made under that section.
Contention of the Assessee:
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