Interest on finalised provisional assessments requires prior duty determination under Section 11A(2), otherwise Section 11AA cannot apply.

Interest under Section 11AA was held not recoverable where duty arose only on finalisation of provisional assessment under Rule 9B(5) and no prior determination of duty had been made under Section 11A(2). The analysis treated the final adjustment after provisional assessment as the point at which duty became recoverable, but found that Section 11AA applies only when a person liable under Section 11A(2) fails to pay within the stipulated time after such determination. On those facts, the statutory condition for charging interest was absent, so the interest demand could not be sustained.

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Issues: Whether interest under Section 11AA was payable on duty arising from finalisation of provisional assessment under Rule 9B(5), and whether such interest could be demanded without a determination under Section 11A(2).

Analysis: The duty demand arose from provisional assessments which were finally adjusted on finalisation of the classification dispute. In such a case, the duty becomes recoverable upon final assessment under Rule 9B(5), and Section 11A(3)(b) treats the date of adjustment after final assessment as the relevant date for proceedings under Section 11A. Section 11AA applies only where a person chargeable with duty under Section 11A(2) fails to pay duty within the stipulated period after such determination. Since no determination of duty under Section 11A(2) preceded the interest demand in the facts of the case, the statutory condition for charging interest was not satisfied.

Conclusion: Interest under Section 11AA was not recoverable on the facts, and the demand for interest could not be sustained.

Final Conclusion: The assessee succeeded, the impugned demand of interest was set aside, and the appeal was allowed.

Ratio Decidendi: Interest under Section 11AA becomes payable only after a duty liability is determined under Section 11A(2); where duty is paid on finalisation of provisional assessment under Rule 9B(5) without such determination, interest cannot be demanded under Section 11AA.

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