Provisional assessment and interest liability: no interest payable once differential duty was paid before finalisation, with refund allowed.

Interest under Rule 7(4) of the Central Excise Rules, 1944 was not sustainable where provisional assessment arose from fluctuating material cost and overheads, and the differential duty had already been paid before finalisation. On final assessment, no duty remained outstanding, so no interest liability survived on the facts. The analysis also applied the principle that, where two High Court views are available, the interpretation favourable to the assessee should be adopted. The interest amount paid was therefore refundable.

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Issues: Whether interest was payable under Rule 7(4) of the Central Excise Rules, 1944 on differential duty already paid before finalisation of provisional assessment, and whether the interest amount was refundable.

Analysis: The assessment was provisional because the assessable value depended on fluctuating material cost and overheads. The differential duty had been paid by the assessee before the final assessment was completed, so no duty remained payable on finalisation of the provisional assessment. In view of the Tribunal's earlier orders in the assessee's own cases, and the principle that where two views of High Courts are available the construction favourable to the assessee must be adopted, the levy of interest was not sustainable. The amount paid as interest was therefore liable to refund.

Conclusion: Interest under Rule 7(4) was not payable on the facts of the case, and the assessee was entitled to refund of the amount paid.

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