Rule cannot provide for rate of interest in excess of that provided in section/Act itself; Rule 8(3) of the Central Excise Rules providing for interest at rate exceeding that provided in erstwhile section 11AB of Central Excise Act was held ultra vires
a) On delay in payment of duty, the assessee discharged interest at rate of 2 per cent per month;
b) Department argued that interest, as per rule 8(3), was to be paid at the rate of 2 per cent per month or Rs. 1,000 per day, whichever was higher and accordingly raised demand for differential interest;
c) The assessee argued that rule 8(3) was ultra vires erstwhile section 11AB (now, section 11AA), as said rule provided for interest at rate exceeding rate provided in said section 11AB.
The High Court held in favour of assessee as under:
1) In view of judgment of the Rajasthan High Court in Lucid Colloids Ltd. v. Union of India 2006 (200) ELT 377, the expression "or rupees one thousand per day, whichever was higher" in rule 8(3) ibid were invalid, being ultra vires the erstwhile section 11AB;
2) Therefore, interest chargeable on delayed payment had to be only at rate of 2 per cent per month or 24 per cent per annum, as notified for purpose of erstwhile section 11AB;
3) Thus demand for differential interest was to be set aside. - K.C. & Sons Appliances (P.) Ltd. v. Union of India  41 taxmann.com 177 (Gujarat)