2016 (8) TMI 746 - AT - Central Excise

Interest liability for differential Central Excise duty without issuance of show cause notice - Rule 7(4) of the Central Excise Rules, 2002 - supply of pre-stressed railway sleepers to Indian railways at the Provisional Price, which was finalised subsequently - Held that - Sub-rule (4) of Rule 7 mandates that the assessee shall be liable to pay interest on any amount payable, consequent upon passing of order of final assessment sub-rule (3) of the said rule. Thus, it is apparent that the interest liability is automatic, if the differential duty, as a result of finalisation of assessment, is paid subsequently. Further Rule 7 of the Central Excise Rules, 2002, no where specifies that for payment of interest, show cause notice has to be issued by the Department. Hence, there is no requirement of issuance of any specific show cause notice for recovery of the interest amount. In the present case since the adjudication order has clearly provided that the interest is required to be paid in terms of Rule 7(4) of the rules, we do not find any infirmity in the said order and also in the impugned order passed by ld. Commissioner (Appeals). - Decided against the appellant

Summary

Issues:
Confirmation of interest liability without issuance of show cause notice.

Analysis:
The appeal was against the order passed by the Commissioner (Appeals) confirming interest liability without the issuance of a show cause notice. The appellant contended that this confirmation was not in line with statutory provisions. The appellant, engaged in manufacturing PSC sleepers, had initially supplied goods at a provisional price to Indian Railways, which was later finalized. The provisional assessment was conducted under Rule 9(B) of Central Excise Rules, 1944 read with Rule 7 of the Central Excise Rules, 2002. After submission of required documents, the final assessment was completed by the adjudicating authority, and the appellant paid the assessed differential duty. The department confirmed interest liability for the differential duty under Rule 7(4) of the Central Excise Rules, 2002. The appellant contested this confirmation, arguing that no show cause notice had been issued regarding the interest liability.

The Tribunal noted that Rule 7(4) mandates the assessee to pay interest on any amount due after the final assessment order. It was clarified that interest liability is automatic when the differential duty is paid post finalization of assessment. Rule 7 of the Central Excise Rules, 2002 does not explicitly require a show cause notice for the payment of interest by the Department. The Tribunal opined that no specific show cause notice was necessary for recovering the interest amount. Since the adjudication order clearly stated the requirement to pay interest under Rule 7(4), the Tribunal found no fault in the order passed by the Commissioner (Appeals). Consequently, the appeal was dismissed as the Tribunal saw no reason to interfere with the impugned order.

This detailed analysis of the judgment highlights the issues involved, the contentions of the parties, and the legal reasoning applied by the Tribunal in arriving at its decision.