2008 (4) TMI 756 - AT - Central Excise

Summary

Issues involved: The appeal involves issues related to provisional assessment under Rule 7 of the Central Excise Rules 2002, liability to pay interest under sub-rule (4) of Rule 7, interpretation of Section 11-AB of the Central Excise Act, and the correct application of interest on duty payable.

Provisional Assessment under Rule 7: The appeal concerns 13 cases of provisional assessment under Rule 7 of the Central Excise Rules 2002. Rule 7 allows an assessee to request the Assistant/Deputy Commissioner to pay duty on a provisional basis when unable to determine the value of excisable goods or the applicable duty rate. The rule mandates the assessee to pay the difference between the provisionally assessed duty and the final duty amount. The case involves a dispute regarding the liability to pay interest under sub-rule (4) of Rule 7.

Interpretation of Section 11-AB: The Revenue argued that interest is chargeable on the duty payable when it becomes due, as per Section 11-AB of the Central Excise Act. However, the Commissioner (Appeals) held that interest is payable from the month following the finalization of assessments. The Tribunal found this interpretation to be in conflict with the law, specifically Rule 7(4) which states that interest is payable from the first day of the month following the assessment.

Correct Application of Interest: The Tribunal clarified that interest is to be paid from the first day of the month following the assessment, as per Rule 7(4). The liability to pay interest arises when the final assessment is made, and the interest is calculated on the differential amount between the provisionally paid duty and the final duty amount. The Tribunal set aside the Commissioner (Appeals) order and directed the original authority to quantify the interest in accordance with the law and the Tribunal's observations.

Conclusion: The Tribunal's decision emphasized the correct application of interest on duty payable under provisional assessment cases, highlighting that interest is payable from the month following the assessment. The case was remanded to the original authority for the quantification of interest in line with the legal provisions.