2011 (3) TMI 531 - AT - Central Excise

Whether in terms of provisions of Rule 7(4) appellants are liable to pay interest on differential duty as the duty amount has been paid prior to final assessment especially when provisions of Rule 7(4) of Central Excise Rules, 2002 read with Section 11AB(2B) of Central Excise Act, 1944 explicitly spells that interest is payable on delayed payment of any amount at appropriate duty from the date of the first date of month succeeding the month for which such amount is confirmed till the date of payment thereof - it is a case of provisional assessment and in the case of SKF the differential duty was paid after finalisation of the assessment - Appeals are allowed

Summary

Issues:
1. Liability to pay interest on differential duty under Rule 7(4) of Central Excise Rules, 2002.

Analysis:
The central issue in the present appeals before the Appellate Tribunal CESTAT, Mumbai is whether the appellants are liable to pay interest on differential duty as per the provisions of Rule 7(4) of the Central Excise Rules, 2002, especially when the duty amount has been paid before final assessment. The Tribunal considered the provisions of Rule 7(4) in conjunction with Section 11AB(2B) of the Central Excise Act, 1944, which explicitly states that interest is payable on delayed payment of any amount at appropriate duty. The appellants argued that a previous decision in their own case and a similar view in another case supported their position that interest is not required to be paid on finalization of provisional assessment. They cited a decision by the Hon'ble High Court of Bombay as precedent. The appellants sought relief by setting aside the impugned orders.

The Departmental Representative (DR) contended that a Supreme Court decision in the case of SKF Ltd. held that interest is payable on all delayed payments, indicating that the appellants should be liable to pay interest. The DR argued for confirming the impugned orders based on this interpretation.

Upon hearing both sides and examining the submissions, the Tribunal noted that in the appellant's previous case and in the case of Ispat Inds. Ltd., it was held that no interest is payable on finalization of provisional assessment if the differential duty has been paid before the assessment is finalized. The Tribunal raised a query regarding the department's challenge to the decision of Ispat Inds. Ltd. before the Apex Court, to which the DR indicated a proposal to file an appeal but was unsure of the current status. The Tribunal distinguished the SKF case, where differential duty was paid after finalization of assessment, from the present case where the duty was paid before finalization. The Tribunal, bound by the decision of the Hon'ble High Court of Bombay, allowed the appeals filed by the appellants, granting them consequential relief.

In conclusion, the Tribunal's decision rested on the interpretation of Rule 7(4) of the Central Excise Rules, 2002, in light of previous judgments and the specific circumstances of the cases cited. The Tribunal's ruling favored the appellants based on the principle established in prior decisions and the absence of similar facts in the SKF case.