2017 (5) TMI 606 - AT - Central Excise

Excess paid duty adjusted towards the duty short paid - provisional assessments - whether the assessee-appellant can be allowed adjustment of short paid duty against excess paid duty during the provisional assessment? - Held that - the matter is covered by the assessee s own case decided decided by the Tribunal s decision in the case of Hindustan Zinc Ltd. vs. CCE, Jaipur 2016 (6) TMI 1093 - CESTAT NEW DELHI , where it was held that When there is provisional assessment, the same is applicable to the entirety of the goods and to arrive at final duty liability, adjustments of duty excess paid to the short payment have to be made - there is no doubt that assessee is entitled to adjustment of the excess paid duty towards short paid duty. Liability of interest - whether assessee is required to pay interest on the differential duty payable which was paid suo moto by the assessee before the finalization of the provisional assessment? - Held that - decision in the case of CCE Nagpur vs. Ispat Industries Ltd. 2010 (10) TMI 178 - BOMBAY HIGH COURT , relied upon, where it was held that Since differential duty was paid even before the final assessment was made, the Tribunal has held that the respondent assessee is not liable to pay interest - as differential duty has been paid by the assessee before the assessment were finalized, there cannot be any liability of interest against the assessee. Appeal allowed - decided in favor of assessee.

Summary

Issues:
Adjustment of short paid duty against excess paid duty during provisional assessment, Payment of interest on the differential duty payable.

Adjustment of Short Paid Duty:
The appellant, engaged in manufacturing lead and zinc concentrates, opted for provisional assessment due to the unavailability of transaction value, assessing goods at 110% of Cost of Production (COP). The department alleged short payment of duty and disallowed adjustment of excess paid duty towards the short paid amount. The Tribunal referred to the case of Hindustan Zinc Ltd. vs. CCE, Jaipur, where it was held that there is no bar in adjusting excess paid duty towards short paid duty. The Tribunal emphasized that the authority finalizing provisional assessment must ascertain the refundability of the excess amount before allowing adjustment. However, the High Court of Karnataka in Toyota Kirloskar Auto Parts Pvt. Ltd. case held that adjustments of duty excess paid to short payment must be made to arrive at the final duty liability.

Payment of Interest on Differential Duty:
Regarding the payment of interest on the differential duty, the Tribunal cited the Bombay High Court case of CCE Nagpur vs. Ispat Industries Ltd., where it was held that interest under Rule 7(4) of the Central Excise Rules is payable from the first date of the month succeeding the month for which the amount is determined by final assessment till the date of payment. Since the differential duty was paid before the final assessment, the Tribunal ruled that the assessee is not liable to pay interest. Following this precedent, the Tribunal in the present case held that there is no liability of interest against the assessee for the payment made before finalizing the assessments.

In conclusion, the Tribunal allowed the appeals, setting aside the lower appellate authority's order. The excess paid duty was adjusted against the short paid duty, as per the Tribunal's interpretation of the law. Additionally, no interest liability was imposed on the assessee for the payment of the differential duty before final assessment, aligning with the Bombay High Court's decision.