TaxTMI 
TaxTMI 
2008 (11) TMI 62
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....ssment. However, the Assistant Commissioner, while finalizing the assessment, directed the Range Superintendent to charge interest as applicable and the same was to be charged from the first day of the month succeeding the month for which month such amount was determined. 3. The Appellants preferred appeals against the aforesaid orders. The Commissioner (Appeals), by his order dated 26th July, 2007, held that in terms of Rule 7(4) of the Central Excise Rules, 2002, interest was payable. from the first day of the month succeeding the month for which month such amount was determined. 4. For illustration, duty for the month of July, 2000 was provisionally assessed, the entire duty for the said month was paid in September, 2001, and the assessment for the same month was finalized in March, 2007, The Commissioner (Appeals) held that in such a scenario interest on duty was payable from 1st August, 2000 to September, 2001. 5. The Appellants preferred an appeal to the Tribunal against the order dated 26th July, 2007. 6. Single Member Bench of the Tribunal by its order 13th May, 2008 agreed with the findings given by the Commissioner (Appeals) and came to a conclusion that the interest,....
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....ut within a period not exceeding six months from the date of the communication of the order issued under sub-rule (1): Provided that the period specified in this sub-rule may, on sufficient cause being shown and the reasons to be recorded in writing, be extended by the Commissioner of Central Excise for the further period not exceeding six months and by the Chief Commissioner of Central Excise for such further period as he may deem fit. (4) The assessee shall be liable to pay interest on any amount payable to Central Government, consequent to order for final assessment under sub- rule (3), at the rate specified by the Central Government by notification issued under section 11AA or section 11AB of the Act from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof. (5) Where the assessee is entitled to a refund consequent to order for final assessment under sub-rule (3), subject to sub-rule (6), there shall be paid an interest on such refund at the rate specified by the Central Government by notification issued under section 11BB of the Act from the first day of the month succeeding the month for which such refu....
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....only if on final assessment the Assistant Commissioner or Deputy Commissioner comes to a conclusion that an amount is due and payable by the assessee towards duly. If there is no amount due and payable by the assessee upon finalization, the provisions of Rule 7(4) do not come into picture. This is a plain grammatical reading of the Rule. (c) The Department is taking contradictory stand on the two limbs of Rule 7(4). On the one Hand, the Department wants to take a literal construction of the phrase "From the first day of the month succeeding the month for which such amount is determined", but on the other hand it refuses to adopt the same literal construction of the phrase "the assessee shall be liable to pay interest on any amount payable to Central Government, consequent to order for final assessment under sub-rule (3)". (d) If such literal and grammatical approach is adopted for the entire sub-rule, interest is payable by the assessee only if any amount is payable consequent to finalization of assessment. If all differential amounts are paid before such finalization, no interest is payable. (e) If it was the intention of the Rule making authority to charge interest from the fi....
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....entral Government, consequent to order of final assessment", is to the amount prior to adjustment of duty provisionally assessed against the duty finally assessed. (e) The following decisions are cited in support of this proposition: (i) A. Infrastructure Ltd. v. C.C.E. - 2000 (117) E.L.T. 583 (T- Larger Bench) (Para 12 to 17). (ii) C.C.E. v. ITC - 2006 (203) E.L.T. 532 (S.C.) (Para 21 to 24). (iii) Sarda PlywoodInd. v. UOI - 2006 (203) E.L.T, 381(Gau) (Para 11). (iv) Gujarat Alkalies and Chemicals v. CC - 2006 (204) E.L.T. 237 (Bom.) (P 28 to 35). (f) Rule 7(4) uses the disjunctive 'comma' to clarify its scheme and it reads as: "-The assessee shall be liable to pay interest on the amount payable to the Central Government, - Consequent to order for final assessment under sub-rule (3), - at the rate specified by the Central Government by notification issued under section 11AA or section 11AB of the Act from the first day of the month succeeding the month for which such amount is determined, till the date of payment." (g) The use of the disjunctive 'comma' before and after the phrase "consequent to order for final assessment under sub-rule (3)", clearly shows that it only i....
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.... if any, and also take into account the amounts deposited by the assessee…….. By its very nature sub-rule (4) of Rule 7 will apply to the liability to pay interest under the final assessment order which interest would become due from the first day of the month succeeding the month for which the amount is determined. For the period covered by the final assessment order, the assessing authority would be working out the liability to pay differential duty as also the liability to pay interest, on account of short payments, if any, during that period, in the cases where provisional assessment is undertaken". (1) Part IV of the Departmental Central Excise Manual, dealing with the Provisional Assessments, explains the scheme of provisional assessment and the procedure of finalization. Interest shall also accrue to the assessee, on the duty excess paid during the provisional assessment and liable to be refunded on finalization, from the first of the month succeeding the month for which such refund is determined. (m) From 2001 onwards, interest in all cases of non-payment/short payment, non-levy/short levy, of duties/taxes under the Customs Act, 1962, Central Excise Act, 1944 and the ....
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....e find that none of the decisions cited at Para 9 above have considered the language of Rule 7(4) i.e. the words "succeeding the month for which such amount is determined". All these decisions proceed on an unreasoned basis that the interest is payable 'from the month in which the amount is determined /assessment is finalised'. On a query from the Bench, ld. Senior Counsel has fairly agreed that this is the case. 17. We find no reason to substitute the words as has been done in the said decisions. Rather, we are persuaded by the decision of the Hon'ble President of this Tribunal, sitting singly, in the case of C.C.E. v. Vindhya Telelinks Ltd. - 2008 (87) RLT 366 (T) which reasons as under: "3. As indicated above, the appeal related to 13 cases in which assessments were provisionally made in terms of Rule 7 of the Central Excise Rules, 2002. Rule 7 provides that where the assessee is unable to determine the value of excisable goods or rate of duty applicable thereto, he may request the Assistant/Deputy Commissioner to permit him to pay the duty on provisional basis at such rate or on such value as may be specified on execution of bond to the effect that he will pay the difference ....
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....nterest will be paid to the assessee or charged from him as the case may be-from the first day of the month succeeding the month for which such refund or duty is determined. This is the result of a combined reading of sub-rules (4) & (5) of Rule 7. Whether the assessee is liable to pay any differential amount or is entitled to refund can be found only when the final assessment is made. But it does not mean that interest is to be charged from the first day of the succeeding month when the amount is determined i.e., the assessment is finalized, as held by the Commissioner. The determination merely quantifies the liability. But so for as the interest liability is concerned, the rule clearly says that the interest is to be paid from the first day of the month succeeding the month "for which such determination is made". As indicated above, provisional assessment is made on the assessee's submit ting a bond to the effect that he will pay the difference between the amounts of duty as may be finally assessed and the amount of duty provisionally assessed. If the assessee had paid lesser amount as duty than what he was liable to pay at the lime of provisional assessment, he cannot be absolve....
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....estion came up for consideration before this court in Serai Kella Glass Works Pvt. Ltd. v. Collector of Central Excise, Patna [1997 (91) E.L.T. 497 = (1997) 4SCC 641] wherein this court clearly opined: "Section 11A deals with recovery of duty not levied or not paid or short-levied or short-paid or erroneously refunded, Proceedings under Section 11A have to be commenced with a show cause notice issued within 6 months from the "relevant date''. "relevant date" has been defined under sub-section (3)(ii) to mean in case where duty of excised is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof. After final assessment a copy of the order on the return filed by the assessee has to be sent to him. Duty has to be paid by the assessee on the basis of the final assessment within 10 days time from the receipt of the return. No question of giving any notice under Section 11A arises in such a case. it is only when even after final assessment & payment of duties, it is found that there has been a short-levy or non-levy of duty, the Excise Officer is empowered to take proceedings under Section 11A within the per....
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....aimed, is embodied in Chapter VII-B. The sole Rule 173-S of this Chapter which had been inserted in the statute w.e.f. 20-9-1991, reads as under:- "Rule 173-S. Application for refund of duty - (1) Any person claiming refund of any duty of excise shall make an application in duplicate, to refund of such duty in the proper from to the Assistant Collector of Central Excise having jurisdiction over the factory of manufacture. (2) An application for refund shall be made in accordance with the provisions of Section 11B of Act." 14, From the perusal of this rule, it is quite evident that application for refund of any duty of excise irrespective of the fact whether duty was paid under the final assessment where the price of the goods was fixed or under provisional assessment where the exact price of the goods and the duly due thereon was not determinable on account of price variation/escalation clause in the contract/purchase order has been subjected to the provisions of Section 11B of the Act. The said section clearly enacts that any person claiming refund of any duty of excise may make an application for refund of such duly to the Assistant Commissioner of Central Excise before the e....
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....tual price charged by him under the contract or purchase order containing Variation/escalation clause, from the buyer and the provisionally paid duty by him at the time of removal of the goods, is adjusted. The adjustment of the provisional duty would amount to effective payment by him in view of the observations made by the Apex Court in the case of Samrat International P. Ltd.(supra)". 20. Though the above two decisions are in relation to the erstwhile Rule 9B of the Central Excise Rules, 1944, yet the terms "provisional assessment", 'final assessment' and 'adjustment of duty" are statutory terms carrying the same connotation under the present set of Rules i.e. Central Excise Rules, 2002. 21. Hence, in terms of Rule 7(4), interest would be payable on the amount determined on final assessment from the month for which such amount is determined till the date of payment. For example: (a) If duty provisionally assessed for January 2008 is Rs. 1000/- and the same is paid in January 2008, but on final assessment in August 2008, the duty for January 2008 is Rs. 2000/-. Then the assessee will have to pay interest on such amount of Rs. 2000/- from February 2008 until the date of its pa....
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.... out the difference between sub-rules (4) & (5) of Rule 7. (b) However, this does not in anyway help the appellants. The learned SDR has relied upon the decision of the Larger Bench, of this Tribunal in the case of ETA Engineering Ltd. v. C.C.E. - 2004 (174) E.L.T. 19 (Tri - L.B.). which says at para 6 as under: "On careful consideration, we find that there are orders passed by the Tribunal on this issue where conflicting options have been expressed. In case of Harilal and Co. v. CCE, Mumbai-I [2000 (115) E.L.T. 375]. it was held that minimum penalty is Rs. 100/- for each day of delay. Same view was taken in CCE, Jaipur v. MilanTentPalace [2000 (131) E.L.T. 274]. There are contrary decisions also as relied upon by the appellant. On careful examination of the provisions of Section 76, which is as under: "76. Penalty for failure to collect or pay service tax. - Any person, liable to pay service tax in accordance with the provisions of Sec. 68 or the rule made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of Section 75, a penalty which shall not be less that one hundred rupees but which may....
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....st would arise only and only if on final assessment when Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise comes to a conclusion that amount is due and payable by the assessee towards duty. If no dues are payable by the assessee upon finalization, inasmuch as the entire amount has been paid before the finalization, then the provisions of Rule 7(4) will not come into picture. In support of this argument, he referred to the provisions of Section 18(3) of the Customs Act, 1962, which deal with the identical situalion and say that the importer/exporter shall be liable to pay interest on any amount payable to the Central Government, consequent to an order for final assessment under sub-section 2, at the rate fixed by the Central Government under Section 28AB from the first day of the month in which duty is provisionally assessed till the date of payment thereof. It was pleaded that under the Customs Act, the intention of the Government to charge interest from the first day of the month in which the duty is provisionally assessed has been made clear, which is not so in the case of Rule 7(4) of Central Excise Rules, 2002. We are not impressed by this plea o....