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M/s. V.T. Dyers and Screen Printers and others Versus Union of India and others

2015 (9) TMI 149 - MADRAS HIGH COURT

Challenge to Rule 8(3) of the Central Excise Rules - Violation of Articles 14, 19(1)(g), 50 and 265 of the Constitution of India - whether interest is chargeable in terms of Rule 8(3) Central Excise Rules or under the provisions of Section 11AB of the Central Excise Act - Held that:- Rule 8(3) of the Central Excise Rules in respect of levy of interest at the rate of ₹ 1000/- per day is held to be invalid. Consequently, the demand raised at whatever stage insofar as levy of interest at S .....

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asekaran, Mr. Vikram Ramakrishnan, Mr. Haja Mohideen Gisthi Common Order (Order of the Court was made by R. Sudhakar,J.) The above Writ Petitions are filed challenging Rule 8(3) of the Central Excise Rules as violative of Articles 14, 19(1)(g), 50 and 265 of the Constitution of India and also to set aside the consequent demand. 2. In all the above Writ Petitions, the issue that arise for consideration is whether interest is chargeable in terms of Rule 8(3) Central Excise Rules or under the provi .....

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interest is ultravires to Section 11AB of the Central Excise Act and cannot be sustained. 4. Heard learned counsel appearing for the petitioners and the learned Standing Counsel appearing for the respondents. 5. In the case of 2006 (200) E.L.T. 377 (Raj.) (Lucid Colloids Limited V. Union of India), while considering the challenge made to Rule 8(3) of the Central Excise Rules, the Rajasthan High Court, after extensively analyzing both the provisions, viz., Rule 8(3) of the Central Excise Rules an .....

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of charge of interest at rate lower than market rate of interest. 10. The prescription of limit of rate of interest at 10% per annum and 36% per annum respectively also makes it clear that basic base of charge of interest is rate per annum and not on any other basis. The provision made in Rules results in altering the nature of charge of interest from compensatory to penalty. By providing rate of interest @ 2% p.m. interest or 24% per annum, the charge of interest cannot be made payment of inte .....

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rmitting charge of interest at the rate of ₹ 1,000/- per day is not computable in relation to amount of Duty in default. Whether ₹ 1,00,000/- is not paid in time or ₹ 1,000/- is not paid in time, the interest chargeable under the Rules remains ₹ 1,000/- per day. Such a device is not permitted by Parent Act. 12. Therefore, to the extent rule provides other than the rate of interest as an alternative mode of levy of interest per day not connected with the amount of duty in .....

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