The respondents herein, manufacturers of MS ingots, were working under the Compounded Levy Scheme under Section 3A of the Central Excise Act, 1944 and exercised their option to pay duty under Rule 96ZO (3) of the Central Excise Rules, 1944. Their annual production capacity was determined at 12800 MTs under the Induction Furnace Annual Capacity Determination Rule, 1997, by the Commissioner’s order dt. 30.9.97 and the duty liability was worked out as Rs.13,33,334/- per month. As per Rule 96ZO, the duty liability as determined was required to be paid in two equal instalments, the 1st instalment latest by the 15th day of each month and the 2nd instalment latest by the 1st day of each month failing which interest @ 18% per month is required to be paid until the date of actual payment. The assessee had not discharged the duty liability and defaulted in payment for the period from 16.9.1997 to 31.3.1998. A letter dt. 24.4.98 was issued by the jurisdictional range officer calling upon the assessee to pay the interest of Rs.1,89,801/-, and this was followed by show-cause notice dt. 24.6.99 for recovery of interest. The demand of interest was confirmed by Asst. Commissioner’s order dt. 23.9.03, which was set aside by the lower appellate authority in the impugned order on the ground of time-bar, relying upon the apex court’s decision in T.V.S Whirpool Ltd.[2000 (119) ELT A177 (SC)] . Hence this appeal by the Revenue.
2. I have heard both sides. As per the proviso to sub-rule (3) of Rule 96ZO, the liability to interest runs concurrently with duty liability. The decision of the apex court relied upon by the Commissioner (Appeals) is misplaced as it relates to the provisions of the Customs Act wherein no time limit has been prescribed. On the other hand, in the case of Arun Smelters Ltd. Vs CCE Chennai [2009 (239) ELT 378], the Tribunal has held that since Rule 96ZO (3) of the erstwhile Central Excise Rules, 1944 was couched in mandatory language, the assessee could not escape the liability to pay interest at the prescribed rate, in the event of default/delay in payment. Following the ratio of the above decision, which is directly applicable on all fours to the facts of the present case, I agree with the ld. SDR that no show-cause notice was required to be issued for recovery of interest and hence the question of notice being time-barred does not arise. Accordingly, I set aside the impugned order and allow the appeal of the Revenue.