2006 (8) TMI 395 - AT - Central Excise

Summary

Issues:
1. Excess duty paid by the assessee during the financial year 2002-2003.
2. Short payment of Central Excise duty in April 2002.
3. Controversy regarding interest for two days on the short payment.
4. Applicability of Rule 7(4) in cases of final assessment after provisional assessment.
5. Interpretation of provisions related to interest payment and refund claims under Rule 7.

Analysis:
1. The appeal was filed by the Revenue against the Commissioner (Appeals) setting aside the Order-in-Original due to the excess duty paid by the assessee during the financial year 2002-2003. The assessing authority found that the assessee had overpaid Central Excise duty by Rs. 1,32,67,052/- but had short paid Rs. 14,08,448/- in April 2002. The controversy revolved around the interest for two days on the short payment, which the Commissioner (Appeals) deemed not maintainable under Rule 7(4) of the Central Excise Rules, 2002.

2. The department's representative argued that Rule 7(4) applied where final assessment followed provisional assessment, allowing for separate interest payment on short paid amounts. The contention was that interest was payable despite the excess payment, and Rule 8 was not relevant in cases of finalized provisional assessments. The assessee's counsel, however, argued that interest under Rule 7(4) was only applicable to the final order amount, and the actual short payment was lower at Rs. 1,14,852/-. The Tribunal's decisions were cited in support of these arguments.

3. Rule 7 provided for provisional assessment and subsequent final assessment orders. Sub-rule (4) of Rule 7 mandated interest payment on amounts due after final assessment. The Tribunal emphasized the calculation of differential duty and interest on short payments based on due dates, even in cases of provisional assessment. The order for final assessment could lead to a refund or duty recovery, with interest payable from the determined month till payment. The Tribunal concluded that interest on short paid amounts could not be claimed if a refund was due as per the final assessment.

4. The judgment highlighted the necessity to consider all payments made by the assessee during the assessed period to determine duty liability and interest. The decision supported the Commissioner (Appeals) ruling, dismissing the appeal and upholding that no interest on short paid amounts could be claimed when a refund was due as per the final assessment. The judgment was dictated and pronounced on 4-8-2006.