2009 (1) TMI 701 - AT - Central Excise

Summary

Issues involved:
The issue involved in this case is the liability to pay interest in cases of provisional assessment under the Central Excise Rules, 2002.

Details of the Judgment:

1. The Larger Bench decision clarified that interest is required to be paid from the first day of the month succeeding the month for which the amount is determined in cases of provisional assessment under Central Excise Rules, 2002, even if the differential amount is paid before the final assessment order is issued under Rule 7(3) of the said rules.

2. The appellants argued that interest can only be charged from March 2002 onwards, as Rule 7(4) of Central Excise Rules, 2002 did not exist prior to that date. They contended that analogous provisions were absent in the Central Excise Rules, 1944 or the Central Excise Rules, 2001 for the period from January 2000 to February 2002.

3. The Departmental Representative (DR) countered this by stating that similar provisions existed under Central Excise Rules, 2001, specifically under Rule 7(4), which mandated the payment of interest. The DR highlighted the statutory provision under Section 37 of the Central Excise Act, 1944, which allowed for the charging of interest on amounts payable following the finalization of provisional assessment.

4. Upon considering the submissions, it was observed that Rule 7(4) of Central Excise Rules, 2001 was analogous to Rule 7(4) of Central Excise Rules, 2002, and interest would be payable from July 2001 when these rules came into effect. The argument that interest should be charged for the entire period due to the existence of the power under Section 37 was dismissed, as the power needed to be exercised for interest to be levied. The decision in the Bimetal Bearings case was referenced, but it was noted that it did not apply to the provisions of Rule 9(b) as it pertained to Rule 7(4) of the Central Excise Rules, 2002.

5. Consequently, the Commissioner (Appeals) order was partially set aside, determining that interest would be chargeable from July 2001 to December 2003, excluding the period before July 2001. The appeal was disposed of accordingly.