2008 (12) TMI 128 - AT - Central Excise

Refund of interest paid at the time of finalization of the provisional assessment - Relevant date for interest - In the case of provisional assessment under the Central Excise Rules, 2002, interest is required to be paid from the first day of the month succeeding the month for which such amount is determined therefore, held that, assessee correctly paid the interest and not entitled to refund assessee s contention that there is no challenge in the Grounds of Appeal of the Revenue on merit and hence the orders of the lower authorities below need to be upheld, not acceptable

Summary

Issues:
Refund claims for interest paid at the time of finalization of provisional assessment; Interpretation of Rule 7(4) of Central Excise Rules, 2002; Applicability of previous tribunal decisions; Premature sanctioning of refund claims; Judicial discipline and reliance on precedent; Challenge on merits by Revenue; Overruling of previous tribunal decision by Larger Bench; Entitlement to refund of interest.

Analysis:
The case involved appeals filed by the Revenue concerning refund claims for interest paid during the finalization of provisional assessment by M/s. Garware Chemicals Ltd. The issue revolved around the correct interpretation of Rule 7(4) of the Central Excise Rules, 2002, regarding the commencement of interest payment. The respondents contended that the interest paid was not actually payable as the duty was paid before the finalization order. However, the Revenue argued that the interest was correctly paid based on the rule's language. The respondents also cited a previous CESTAT decision, which the Assistant Commissioner considered while sanctioning the refund claims.

The Revenue challenged the premature sanctioning of the refund claims, citing an ongoing appeal before the High Court regarding a similar case. The Commissioner (Appeals) rejected the Departmental appeals based on principles of judicial discipline and reliance on precedent set by the Supreme Court and CBEC Circular. The Revenue relied on a Larger Bench decision in another case to argue against the legality of the sanctioning of refunds based on the previous tribunal decision. The respondents, on the other hand, cited Supreme Court judgments to support upholding the lower authorities' orders.

The Member (T) carefully considered the submissions and held that the Revenue's challenge on merits was consistent throughout the proceedings, even if not explicitly mentioned in the 'Grounds of Appeal'. The Member noted the overruling of the previous tribunal decision by the Larger Bench, emphasizing the correct interpretation of the rule to require interest payment from the first day of the succeeding month. Consequently, the interest was deemed correctly paid by the respondents, and they were directed to repay the refund amounts. The appeals by the Revenue were allowed, setting aside the Commissioner (Appeals) orders.

In conclusion, the judgment clarified the interpretation of Rule 7(4) and the applicability of previous tribunal decisions, emphasizing the importance of consistent challenges on merits and the impact of precedent-setting decisions by higher benches on similar cases. The decision highlighted the need for adherence to legal principles and correct application of rules in determining entitlement to refunds.