JUDGMENT : R. Sudhakar, J. 1. 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 provisions of Section 11AB of the Central Excise Act. 3. It is submitted by both the learned counsel appearing for the petitioners as well as the learned Standing Counsel appearing for the respondents that the issue involved in these Writ Petitions is covered by a decision of the Rajasthan High Court in the case of 2006 (200) E.L.T. 377 (Raj.) (Lucid Colloids Limited V. Union of India), wherein the Rajasthan High Court held that Rule 8(3) of the Central Excise Rules to the extent it provides levy of 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 and Section 11B of the Central Excise Act, held as follows: “ 9. The Legislature in its wisdom has instead of prescribing itself a fix rate, has left it to the Central Government to fix the rate at which such interest is to be charged so that with charging rates of interest, every time Statute is not to be amended but within the limit prescribed, the Central Government may adjust the rate of interest chargeable on delayed payments, making it sure that delayed payment not become profitable on account 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. 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 interest at monthly rates. Interest rate @ 2% per month can only be read as 24% per annum. Providing alternative levy of interest Rs. 1,000/- per day, if it is higher than the interest chargeable at the rate prescribed, is clearly by way of penalty and contrary to enabling power conferred on Rule Making Authority under Section 11AB of the Act. 11. Section 11AB clearly relates to charge of rate of interest related to amount in default for the period, the assessee remains in default of payment. Permitting charge of interest at the rate of Rs. 1,000/- per day is not computable in relation to amount of Duty in default. Whether Rs. 1,00,000/- is not paid in time or Rs. 1,000/- is not paid in time, the interest chargeable under the Rules remains Rs. 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 default is beyond enabling power of the Parent Act. The Rule 8(3) to the extent it provides after providing the rate of interest chargeable on delayed payment of duty, an alternative mode to provide higher ceiling limit is clearly in violation of Rule 11AB and cannot be sustained. 13. Since the alternative mode is severable from the other part of the provision without affecting its efficacy, it does not require that the entire rule is to be struck down. 14. 13. Since the alternative mode is severable from the other part of the provision without affecting its efficacy, it does not require that the entire rule is to be struck down. 14. We therefore, hold that Rule 8(3) to the extent it provides levy of interest at the rate of Rs.1,000/- which is higher as alternative to charge of interest @ 2% on the amount of Duty means to be understood as 24% per annum on the amount of Duty in default is ultra vires to Section 11AB of the Act and cannot be sustained and is held inoperative. 15. Accordingly, the writ petition is allowed. The part of Rule 8(3) which includes expression “at the rate of two per cent, per month or rupees one thousand per day, whichever is higher” is held to be invalid. Consequently, interest chargeable on delayed payment had to be only at the rate of 2% per month or for that matter 24% per annum as notified by the State Government in terms of the Section 11BC, which is between the permissible limits in ‘terms of Section 11AB. Consequently, the demand notices are quashed and interest on delayed payment has to be recomputed only to the extent it is referred to the rate of interest @2% per month or 24% per annum under Rule 8(3).” 6. The above-said decision was followed by the Gujarat High Court in the case of K.C. & Sons Applicances Pvt. Ltd. V. Union of India reported in 2014 (306) ELT 249 (Guj.). 7. We are in respectful agreement with the above-said decisions. Accordingly, Rule 8(3) of the Central Excise Rules in respect of levy of interest at the rate of Rs.1000/- per day is held to be invalid. Consequently, the demand raised at whatever stage insofar as levy of interest at Rs.1000/- per day in terms of Rule 8(3) of the Central Excise Rules is also set aside. In the result, the above Writ Petitions stand allowed. No costs. Consequently, connected Miscellaneous Petitions are closed.