2018 (2) TMI 565 - AT - Central Excise

Tribunal: Interest under Excise Rules not payable immediately after provisional assessment.

The Tribunal held that interest under Rule 7(4) of the Central Excise Rules, 2002 is payable after finalization of provisional assessment, not immediately ... Demand of interest - rule 7(4) of Central Excise Rules, 2002 read with section 11AA of Central Excise Act, 1944 - price variation clause - finalization of provisional assessment - whether interest is leviable/payable under Rule 7(4) of Central Excise Rules, 2002 immediately from next month to the provisional assessment directed by the department or after finalization of the provisional assessment on determination of the duty? - Held that: - Under rule 7(4) of CER 2002 (as it existed before 1st March 2016), the finalization of provisional assessment yielding differential duty would obligate the assessee to pay interest between the date of such determination and the date of payment. A plain reading of this provision does not confer jurisdiction to demand interest from the date of invoice - The appellant has discharged the liability to differential duty liability by raising supplementing voices and the finalization of provisional assessment was merely a confirmation of the differential duty leviable. Reliance placed in the case of CEAT Limited v, Commissioner of Central Excise & Customs, Nashik [2015 (2) TMI 794 - BOMBAY HIGH COURT], where it was held that The liability to pay interest arises on any amount payable to Central Government and consequent to order for final assessment under Rule 7 subrule (3). Demand set aside - appeal allowed - decided in favor of appellant. Issues:Interpretation of Rule 7(4) of Central Excise Rules, 2002 regarding the levy of interest on provisional assessment.Analysis:The judgment dealt with the limited question of whether interest is payable under Rule 7(4) of the Central Excise Rules, 2002 immediately from the next month to the provisional assessment directed by the department or after finalization of the provisional assessment on determination of duty. The appellant relied on the decision of the Hon’ble Bombay High Court in CEAT Ltd. vs CCE, which was later upheld by the Supreme Court. On the other hand, the Revenue cited a judgment of the Hon’ble Allahabad High Court in favor of the Revenue's stance. The Tribunal analyzed Rule 7(4) and the interpretations provided by the Bombay High Court, emphasizing that interest is payable on any amount determined consequent to the final assessment under sub-rule (3), not immediately after provisional assessment. The Tribunal highlighted the difference between Rule 7(4) of Central Excise Rules, 2002 and Section 18(3) of the Customs Act, 1962 to support its interpretation.The Tribunal referred to the Bombay High Court’s judgment in CEAT Ltd.'s case, which was upheld by the Supreme Court, making it binding on the Tribunal. The Tribunal emphasized that the judgment of the Bombay High Court, which favored the appellant, took precedence over the Allahabad High Court’s judgment due to the subsequent Supreme Court decision. Consequently, the impugned order was set aside, and the appeals were allowed, granting relief to the appellant as per law.