IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN MONDAY, THE 26TH MAY 2008 / 5TH JYAISHTA 1930 C.E.Appeal.No. 4 of 2006() -------------------------- (AGAINST ORDER NO.1227/05 DATED 27/07/2005 IN APPEAL NO.ST/11/2003 of CUSTOMS,EXCISE&SERVICE TAX APP.TRIBUNAL,BANGALORE) .................... : APPELLANT/RESPONDENT: -------------------------------------- THE COMMISSIONER, CENTRAL EXCISE AND CUSTOMS,CALICUT COMMISSIONERATE CALICUT. BY ADV. SRI.JOHN VARGHESE, ASSISTANT SG SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR RESPONDENTS: APPELLANT: ----------------------- THE GENERAL MANAGER, TELECOM, BSNL, PALAKKAD. BY ADV. SRI.V.R.KESAVAKAIMAL, SC, BSNL FOR R.1 THIS CENTRAL EXICISE APPEAL HAVING BEEN FINALLY HEARD ON 26/05/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. ------------------------- C.E.Appeal No. 4 of 2006 --------------------------------- Dated, this the 26th day of May, 2008 J U D G M E N T Ramachandran Nair, J. The appeal is filed against the order of the Customs, Excise and Service Tax Appellate Tribunal canceling interest demanded from the respondent under Section 75 of the Finance Act 1994. The respondent, which is a Government Department, delayed payment of service tax by four days on account of delay in allotting head of account for payment. Learned counsel for the respondent submitted that the amount was deposited in time, but on account of delay in allotting head of account, credit was given for payment only with a delay of four days. Whatever be the reason for the belated payment, we find that the provision for interest containing Section 75 is mandatory. The Tribunal appears to have cancelled the interest on the assumption that the demand made is penalty. However, on going through the impugned order of the Additional Commissioner, we find that he had waived penalty and the amount of Rs.19,009/- demanded is only in the form of interest under Section 75, which is mandatory in nature. Learned counsel for the respondent submitted that the amount was also deposited prior to CEA No.4/2006 -2- final orders issued by the Tribunal. Since we find that the Tribunal has cancelled the demand treating as penalty, we allow the appeal by cancelling the order of the Tribunal and restoring the demand of interest under Section 75 of the Act. The deposit made will be adjusted towards liability in terms of demand but without charging any interest thereon. (C.N.RAMACHANDRAN NAIR, JUDGE) (V.K.MOHANAN, JUDGE) jg