2017 (10) TMI 737 - AT - Central Excise

Demand of interest - relevant date for calculation of interest - interpretation of statute - Rule 7 (4) of the Central Excise Rules 2002 - Held that - the issue is no more res integra and stands settled by earlier decision of the Tribunal in the same assessee s case 2016 (3) TMI 133 - CESTAT CHENNAI where it was held that the interest liability would accrue only after the finalization of the provisional assessments - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay interest on differential duty.
2. Date from which interest is payable - from provisional assessment order or finalization of assessment.

Analysis:

Issue 1: Liability to pay interest on differential duty
The appellants, engaged in the manufacture of Steel Tubes, opted for provisional assessment for the period Apr. '14 to Mar. '15. The final assessment was completed on 07.08.2015, enhancing the value of goods cleared to their sister concern. The appellant paid the differential duty on 14.07.2015, before the finalization. Proceedings were initiated for interest payment from Apr. '14 till the actual duty payment. The authorities relied on Rule 7(4) of the Central Excise Rules, 2002, holding the assessee liable for interest from the month of liability for differential duty. The original adjudicating authority and Commissioner (Appeals) upheld the interest payment.

Issue 2: Date from which interest is payable
The key question was whether interest should be paid from the first month of the provisional assessment order or after finalization. The Tribunal, in the appellant's previous case, held that interest liability arises only after finalization of provisional assessments. This decision was based on High Court of Bombay rulings in cases like CEAT Ltd. Vs Commissioner of Central Excise & Customs, Nashik and Tata Motors Ltd. Vs Commissioner of Central Excise, Pune-I. The Tribunal also noted that the High Court decision in CEAT's case was affirmed by the Supreme Court. However, the Revenue cited the Allahabad High Court decision in Bharat Heavy Electricals Ltd. Vs Commissioner of Customs & Central Excise, Kanpur. Despite this, the Tribunal favored the Bombay High Court's stance, also referencing the Supreme Court's judgment in J.K. Synthetics Ltd. Vs Commercial Taxes Officer.

In conclusion, the Tribunal found the issue settled by its earlier decision in the same assessee's case and ruled in favor of the appellant, setting aside the impugned order and granting consequential relief.