2017 (11) TMI 761 - AT - Central Excise

Liability of interest - Provisional assessment - whether interest is leviable/payable under Rule 7(4) of Central Excise Rules, 2002 immediately from next month to the provisional assessment directed by the department or after finalization of the provisional assessment on determination of the duty? Held that - In sub Section (3) of Section 18 of the Customs Act,1962 it is clearly laid down that interest would be payable after the provisional assessment is directed, whereas under sub Rule (4) of Rule 7of Central Excise Rules,2002 the interest would be attracted only on determination of duty i.e. the when the duty paid initially by way of provisional assessment, determined through final assessment - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether interest is leviable under Rule 7(4) of Central Excise Rules, 2002 immediately from next month to the provisional assessment or after finalization of the provisional assessment on determination of the duty.

Analysis:
The judgment primarily revolves around the interpretation of Rule 7(4) of the Central Excise Rules, 2002. The key question at hand is when the liability to pay interest arises in cases of provisional assessment. The appellant's counsel relies on the decision of the Hon'ble Bombay High Court in CEAT Ltd. case, which was subsequently upheld by the Supreme Court. On the other hand, the Revenue's counsel points to a judgment of the Hon'ble Allahabad High Court favoring the Revenue's stance on the issue. The tribunal delves into the interpretation of Rule 7(4) and compares it with Section 18(3) of the Customs Act, 1962 to provide clarity on the matter.

The tribunal extensively quotes the Hon'ble Bombay High Court's decision in the CEAT Ltd. case to emphasize that interest is payable only on the amount determined through final assessment, not immediately after provisional assessment. The tribunal highlights the distinction between Rule 7(4) of the Central Excise Rules, 2002 and Section 18(3) of the Customs Act, 1962 to support its interpretation that interest becomes due only upon final determination of duty. The tribunal upholds the principle established by the Hon'ble Bombay High Court and the Supreme Court, making it binding on the tribunal.

In conclusion, the tribunal sets aside the impugned order and allows the appeals in favor of the appellant, in line with the judgment of the Hon'ble Bombay High Court and the Supreme Court. The decision clarifies the timing of interest payment under Rule 7(4) of the Central Excise Rules, 2002, providing a clear precedent for future cases involving similar issues.