Premature interest demand on inadmissible Modvat credit is unsustainable until the dispute is finally resolved.

Interest on inadmissible Modvat credit under section 11AA was stated to arise only from the date of the appellate authority's or court's final order, so a demand raised while the main dispute remained pending was premature and unsustainable. The communication issued by the Assistant Commissioner was treated as an administrative instruction rather than a matter requiring direct tribunal intervention, and the jurisdictional Commissioner was to examine the assessee's representation and pass appropriate orders.

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Issues: Whether interest could be demanded on Modvat credit found inadmissible before the dispute was finally settled, and whether the communication issued by the Asstt. Commissioner required intervention by the Tribunal.

Analysis: Section 11AA provides for interest on delayed payment of duty, and the Explanation makes the relevant date for commencement of the interest period the date of the order of the appellate authority or the Court. On that basis, liability to interest does not arise until the dispute is finally determined. The demand raised at the stage when the main appeal was still pending was therefore premature. At the same time, the impugned communication was treated as an administrative instruction, and the appropriate course was for the jurisdictional Commissioner to examine the representation and pass suitable orders.

Conclusion: The demand for interest was held to be premature, and the jurisdictional Commissioner was directed to consider the assessee's representation and issue appropriate orders to the Asstt. Commissioner.

Final Conclusion: The assessee obtained relief against immediate recovery of interest, while the matter was remitted administratively for consideration by the jurisdictional Commissioner.

Ratio Decidendi: Interest under Section 11AA cannot be enforced before the dispute is finally resolved by the appellate authority or court, and a premature recovery demand is not sustainable.

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