Interest on delayed payment of duty [Section 11AA]:

Interest of duty not paid on time is provided for in the Central Excise statute. It is expected that the interest provision would normally not have to be invoked as the assessee would make the duty payment on time.

Section 11AA contains the provisions in this regard. It provides as follows:-

(a) Interest payable on delayed payment of duty: Notwithstanding anything contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder, the person, who is liable to pay duty, shall, in addition to the duty, be liable to pay interest at the specified rate, whether such payment is made voluntarily or after determination of the amount of duty under section 11A [Sub-section (1)].

(b) Rate and time period for computation of interest [Sub-section (2)]: Interest is payable in terms of section 11A after the due date, by the person liable to pay duty.

Rate of interest: Central Government may, by notification in the Official Gazette, fix the interest ranging between 10% and 36% per annum. With effect from 01.04.2011, the interest at the rate 18% per annum has been notified.

Time period: Interest shall be calculated from the date on which such duty becomes due up to the date of actual payment of the amount due.

(c) Exemption from payment of interest: No interest shall be payable subject to the following conditions:-

(a) the duty becomes payable consequent to issue of an order, instruction or direction by the Board under section 37B.

(b) Full amount of duty is paid voluntarily within 45 days from the date of issue of such order, instruction or direction; and

(c) No right to appeal against such payment at any subsequent stage is reserved.