2015 (5) TMI 115 - AT - Central Excise

Interest liability from default date; benefits granted per law.

The appeal was allowed by Appellate Tribunal CESTAT CHENNAI, stating that interest liability arises from the date of default in discharging the demand ... Final assessment - date of demand - enforceable demand - provisional assessment - interest on delayed payment - pre-deposit dispensedFinal assessment - date of demand - enforceable demand - provisional assessment - interest on delayed payment - Liability for duty and interest becomes enforceable only from the date of finalisation of assessment (date of demand); during provisional assessment the liability is not crystallised and interest is payable only if there is default in payment of the enforceable demand. - HELD THAT: - The Tribunal accepted the appellant's submission that a demand becomes crystalised for recovery only upon final assessment, and that until such finalisation liability remains inchoate during provisional assessment. The orders under challenge were therefore set aside to the extent they treated provisional assessment as giving rise to an enforceable demand. The departmental representative's submission that interest is payable for default was accepted in part: where there is default in payment of an enforceable (finalised) demand, interest will accrue from the date of default. The Tribunal accordingly allowed the appeal, dispensing with the requirement of pre-deposit and directing that any consequential benefit shall follow in accordance with law. [Paras 4, 5]Appeal allowed; pre-deposit dispensed; duty liability and interest are enforceable only from date of finalisation of assessment (date of demand), and interest, if any, accrues from date of default in payment of that enforceable demand.Final Conclusion: The appeal is allowed: the liability became enforceable only from finalisation of assessment (date of demand), provisional assessment did not create a crystalised demand, interest is payable only for default after final demand, pre-deposit requirement is dispensed with and consequential benefits shall follow as per law. The judgment by Appellate Tribunal CESTAT CHENNAI states that interest liability arises from the date of default if there is a default to discharge the demand upon final assessment. The liability becomes enforceable from the date of demand, and interest flows in case of default in payment of enforceable demand. The appeal was allowed with consequential benefits to flow in accordance with the law.