2015 (11) TMI 87 - AT - Central Excise

Interest liability - Provisional assessment - Held that - Appellant had paid the entire differential duty before the finalisation of the provisional assessment sought. There is no dispute that the provisional assessment were finalised by the authorities on 27.08.2012, after almost two months when the appellant paid the differential duty arising out of such finalisation and there is no difference in duty paid. I find that the first appellate authority has not considered this vital fact in his order and also on the provisions of Section 7(4). The said rules specifically states that the interest liability arises on the assessee consequent to the order of final assessment as per sub-rule (3). In the case in hand, when the amount is already discharged and on final assessment there are no dues from the appellant, liability of interest does not arise. - issue is now settled by the Hon ble High Court in CEAT Ltd. 2015 (2) TMI 794 - BOMBAY HIGH COURT as well as earlier decision holding that interest is not payable if assessee pays the duty before finalisation, I find the impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

Summary

Issues:
Interest liability on appellant in respect of provisional assessment and finalization.

Analysis:
The appeal concerns interest liability on the appellant for provisional assessment of goods cleared during a specific period. The appellant had sought provisional assessment for goods cleared between April 2011 to March 2012, which was finalized on 27.08.2012. Before finalization, the appellant voluntarily paid the differential duty. A show-cause notice was issued demanding interest, which the appellant contested citing Rule 7(4) of the Central Excise Rules, 2002. Both lower authorities held the appellant liable for interest, disregarding the appellant's payment before finalization. The appellant relied on the judgment of Ispat Industries Ltd., upheld by the Hon'ble High Court of Bombay, to support their case.

The first appellate authority's order was deemed unsustainable for multiple reasons. Firstly, the appellant had paid the differential duty before finalization, which the authority failed to consider. Section 7(4) specifies interest liability post-final assessment, not applicable when the amount is already paid. Secondly, a similar issue was decided in Ispat Industries Ltd., where the Tribunal ruled in favor of the appellant. The High Court upheld this decision, emphasizing that interest is not payable if the duty is paid before finalization. The judgment detailed the legal provisions and the obligation to pay interest only if the duty remains unpaid post-final assessment. The Tribunal's reliance on Section 11AA and Section 11BB was found incorrect by the High Court.

The settled issue, as per the High Court's decision in CEAT Ltd., confirms that interest is not payable if the duty is paid before finalization. The impugned order was set aside, and the appeal was allowed, aligning with the legal precedents established in Ispat Industries Ltd. and Tata Motors. The judgment emphasizes the importance of timely duty payment to avoid interest liabilities, as per the relevant statutory provisions and legal interpretations.

This detailed analysis of the judgment highlights the key legal arguments, precedents, and interpretations that led to the decision regarding interest liability in the context of provisional assessments and finalizations under the Central Excise Rules, 2002.