Tribunal Rules Interest Not Chargeable on Provisional Assessment Under Central Excise Rules, Favoring Appellant.

The Tribunal set aside the impugned order concerning the chargeability of interest under rule 7 of the Central Excise Rules, 2002, in the case involving M/s Cadbury India Ltd. The dispute centered on the interest liability following the finalization of a provisional assessment. The Tribunal relied on a CBIC circular and previous judicial decisions, concluding that the interest liability only applied to assessments made provisionally under the new rules. Consequently, the interest on the unpaid amount of Rs. 4,79,41,410 was not upheld, and the appeal was decided in favor of the appellant.

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Issues involved: Chargeability of interest in terms of rule 7 of Central Excise Rules, 2002 following confirmation of demand, applicability of circular no. 354/66/2001-TRU, interpretation of previous judicial decisions regarding interest liability on finalization of provisional assessment.

Summary:
The appeal by M/s Cadbury India Ltd challenged the order of the Commissioner of Central Excise (Appeals) regarding the chargeability of interest under rule 7 of Central Excise Rules, 2002. The dispute arose from a demand of Rs. 36,07,51,390 on finalization of provisional assessment, with a remaining unpaid amount of Rs. 4,79,41,410. The first appellate authority set aside a portion of the interest, leaving only the interest on the unpaid amount in question.

The appellant relied on circular no. 354/66/2001-TRU issued by CBIC, which clarified the application of interest provisions in cases of provisional assessment. Additionally, reference was made to a decision by the Hon'ble High Court of Bombay, emphasizing that interest liability arises only for assessments made provisionally after the new rules came into effect.

The Authorized Representative cited a decision by the Hon'ble High Court of Gujarat in support of their argument. The appellant had cleared goods provisionally under rule 9B of Central Excise Rules, 1944, which were later finalized under the Central Excise Rules, 2002. The issue of interest liability on finalization of provisional assessment was addressed by CBIC's circular and a previous Tribunal decision involving the same appellant.

Based on the clarification from CBIC and previous judicial determinations, the Tribunal found that the impugned order was not sustainable and accordingly set it aside.

(Order pronounced in the open court on 06/12/2023)

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