Interest on differential excise duty is not chargeable when the duty is paid before final assessment.

Interest on differential excise duty under Rule 7(4) of the Central Excise Rules, 2002 read with Section 11AB(2B) of the Central Excise Act, 1944 arises only when an amount determined on final assessment remains unpaid during the statutory period. Where the assessee pays the differential duty before final assessment is completed, the amount is not outstanding for that period and the statutory basis for charging interest does not arise. On that footing, no interest liability was attracted on the differential duty.

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Issues: Whether interest was payable on differential excise duty under Rule 7(4) of the Central Excise Rules, 2002 read with Section 11AB(2B) of the Central Excise Act, 1944, when the differential duty had been paid before final assessment.

Analysis: Interest under Rule 7(4) is attracted from the first day of the month succeeding the month for which the amount is determined by final assessment till the date of payment. Where the differential duty is paid before the final assessment itself, the amount is not outstanding during the relevant period and the statutory basis for charging interest does not arise.

Conclusion: Interest was not payable on the differential duty, and the issue was decided in favour of the assessee.

Ratio Decidendi: Interest under Rule 7(4) of the Central Excise Rules, 2002 is chargeable only on an amount determined by final assessment and remaining unpaid during the statutory period; if the differential duty is paid before final assessment, no interest liability arises.

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