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Issues: Whether, on the facts, the assessments were provisional and, if so, whether interest could be demanded under Section 11AA of the Central Excise Act, 1944 when the differential duty arose on finalization of provisional assessment.
Analysis: The affidavit and correspondence placed before the Court showed that the department itself had treated the clearances as provisional, made against B-13 bond and bank guarantee, and that the assessment had to be finalized under Rule 9-B of the Central Excise Rules, 1944. Where duty becomes payable only on finalization of provisional assessment, the liability is worked out under the provisional assessment framework and not as a demand under Section 11A of the Central Excise Act, 1944. Since Section 11AA applies only to duty determined under the statutory mechanism invoked by Section 11A, interest could not be levied on a demand arising from finalization of provisional assessment.
Conclusion: The assessments were provisional, the differential duty was not exigible under Section 11A of the Central Excise Act, 1944, and interest under Section 11AA of the Central Excise Act, 1944 was not recoverable. The appeal succeeded.
Ratio Decidendi: Interest under Section 11AA of the Central Excise Act, 1944 cannot be levied where the duty liability arises only on finalization of provisional assessment under the provisional assessment rules and not on a duty demand under Section 11A of the Central Excise Act, 1944.
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