2023 (2) TMI 181 - SC - Central Excise

Court rules interest on differential duty payable from due date of provisional duty until final assessment. Decision based on similar case.

BHARAT HEAVY ELECTRICALS LTD. Versus COMMR. OF CUS. & C. EX., KANPUR

The court held that interest on the differential duty is payable from the due date of payment of provisional duty until the payment of the ... Interest on differential duty from the date of clearance of goods - payment of duty assessed provisionally by the Jurisdictional Assistant/Deputy Commissioner of Central Excise under Section 7(1) of the Central Excise Act, even though the provisional duty had been paid prior to the date of the passing of the final assessment order under Section 7(3) of the Central Excise Act, 2002. HELD THAT:- The issues raised in this case are squarely covered in M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2019 (5) TMI 657 - SUPREME COURT], where it was held that Section 11A and section 11AB as it stood at the relevant time did not provide read with the rules any other point of time when the amount of duty could be said to be payable and so equally the interest. Thus, interest would be payable from the due date of payment of provisional duty for the purpose of removal of the goods in question till the date of payment of the balance/differential duty upon final assessment. SLP disposed off. Issues Involved: Determination of liability to pay interest on differential duty from the date of clearance of goods based on provisional assessment under Section 7(1) of the Central Excise Act.Analysis:1. Issue of Liability to Pay Interest on Differential Duty: The primary issue in this case revolves around the liability of the petitioner to pay interest on the differential duty from the date of clearance of goods. The question arises from the provisional assessment of duty by the Jurisdictional Assistant/Deputy Commissioner of Central Excise under Section 7(1) of the Central Excise Act. The critical aspect is whether interest is payable even though the provisional duty was paid before the final assessment order under Section 7(3) of the Act.2. Reference to a Three-Judge Bench: Initially, a Two-Judge Bench directed the matter to be referred to a three-Judge Bench in light of the judgment in Steel Authority of India Limited v. Commissioner of Central Excise, Raipur. The issues in the present case were deemed identical to those in the Steel Authority of India Limited case.3. Adjourning the Case: Subsequently, a three-Judge Bench adjourned the case for three months pending the delivery of the judgment in the Steel Authority of India Limited case, which was reserved at that time.4. Judgment in Steel Authority of India Limited Case: The Supreme Court, in the Steel Authority of India Limited case, clarified that interest on differential duty is payable from the due date of payment of provisional duty until the payment of the balance/differential duty upon final assessment. The Court emphasized that the duty and interest are to be paid based on the month for which the duty is determined, not the month of final assessment.5. Decision in Present Case: The issues raised in the present case were found to be squarely covered by the judgment in the Steel Authority of India Limited case. Consequently, the Court held that interest would be payable from the due date of payment of provisional duty until the payment of the balance/differential duty upon final assessment. The special leave petition was disposed of accordingly, with pending applications being disposed of as well.