Calculation of Interest on Short Duty Payment: Tribunal Decision Prevails Over High Court

The court held that interest on short payment of duty should be calculated from the 1st day of the following month on the differential duty, despite arguments based on High Court decisions. The judge emphasized following the Tribunal's decision over the High Court's ruling, as the law was not settled by the Supreme Court. Interest was deemed payable after adjusting excess payment towards short payment, with the appeals decided accordingly.

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Issues:
1. Calculation of duty in provisional assessment
2. Payment of interest on short payment of duty
3. Applicability of High Court decisions on interest payment

Analysis:

Issue 1: Calculation of duty in provisional assessment
The appeals involved two parties, one being the Revenue and the other the assessee, covering the periods 2005-06 and 2006-07. The appellant opted for provisional assessment due to a related party transaction, which was allowed. However, upon finalization, it was discovered that there was both short payment and excess payment of duty. In 2005-06, there was a short payment of duty amounting to Rs. 1,30,65,161, which was rectified before finalization. Additionally, there was an excess payment of Rs. 47,51,060. In 2006-07, the excess payment was Rs. 1,10,84,180, and the short payment was Rs. 35,29,558.

Issue 2: Payment of interest on short payment of duty
The counsel argued that interest payment on short payment of duty should not apply as per the High Court's decision, which stated that interest calculation should consider the total duty payable for all goods, not each item separately. Referring to past cases and the Supreme Court's order, the counsel contended that if differential duty is paid before final assessment, no interest is due. However, the judge disagreed, stating that the law was not final as the Supreme Court kept the question of law open, indicating that the High Court's decision did not establish a binding precedent. Therefore, interest was deemed payable from the 1st day of the following month on the differential duty.

Issue 3: Applicability of High Court decisions on interest payment
The judge concluded that the decision of the Larger Bench of the Tribunal, not the High Court's decision, should be followed regarding interest payment. The dismissal of the Special Leave Petition by the Supreme Court did not establish a final decision on the law. Thus, the interest was held payable from the 1st day of the next month on the differential duty, after adjusting excess payment towards short payment. The appeals were decided based on these observations.

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