2017 (6) TMI 150 - AT - Central Excise

Liability of interest - valuation in terms of rule 8 of the Valuation Rules 2000 - goods are supplied free but on payment of duty and valuation is arrived at in terms of rule 8 of the Valuation Rules 2000 - appellant declined to pay interest on such differential duty on the ground that in terms of rule 7(4) of CER 2002 interest is payable from first day of the month succeeding the month for which such amount is determined; that in their case differential duty was paid before finalization of provisional assessment - Held that - Since differential duty was voluntarily paid before finalization of assessments which did not result in any dues and payable to the Govt the interest was not leviable. If the interest was payable on the duty on which the assessee paid differential duty prior to finalization of assessment then the Central Excise rules 2002 would have specifically said so - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against order-in-original upholding rejection of appellant's appeal
- Differential duty payment and interest calculation
- Applicability of rule 7(4) of Central Excise Rules, 2002
- Interpretation of judgments of High Court and Supreme Court
- Precedents set by various Tribunal decisions
- Liability to pay interest on short fall in duty payment

Analysis:

The appeal before the Appellate Tribunal CESTAT Bangalore challenged the order-in-original that upheld the rejection of the appellant's appeal regarding the differential duty payment and interest calculation. The case involved the clearance of manufactured auto parts to a sister concern for further manufacture and return, where goods were supplied free but duty was paid. The appellant disputed the interest payment on the differential duty, citing rule 7(4) of the Central Excise Rules, 2002, which states interest is payable from the first day of the month succeeding the determination of the amount. The Assistant Commissioner finalized the assessment, demanding differential duty and interest. The Commissioner rejected the appeal, leading to the present appeal.

During the hearing, the appellant's counsel argued that the impugned order failed to consider relevant judgments of the High Court and the Supreme Court, which favored the assessee. Referring to the case law of Toyota Kirloskar Auto Parts Pvt Ltd Vs CCE, the counsel contended that the issue was settled and not resintegra. The counsel further cited decisions of various Tribunal benches, including Hindustan Zinc Ltd, Sangam Spinners, and Jonas Woodhead & Sons, which relied on the Toyota Kirloskar case. The High Court of Karnataka's judgment highlighted the liability to pay interest on any duty shortfall after final assessment, emphasizing the total duty payable for all goods subject to provisional assessment. The counsel also mentioned the CEAT Ltd case, where the Bombay High Court ruled in favor of the assessee regarding interest payment between provisional and final assessments. The Tribunal, following the precedents and legal interpretations, set aside the impugned order, allowing the appeal with consequential relief.

In conclusion, the Tribunal's decision was based on the interpretation of relevant legal provisions, judgments of higher courts, and precedents set by various Tribunal decisions. The appellant's argument regarding the liability to pay interest on duty shortfalls was supported by established case law and legal principles, leading to the setting aside of the Commissioner's decision.