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2017 (12) TMI 143 - AT - Central ExciseRelevant date for calculation of interest - finalization of provisional assessment - whether interest is leviable/payable u/r 7(4) of CER 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? - interpretation of statute - 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. The said Provision has been interpreted by the Hon ble Bombay High Court in CEAT Ltd. s Case 2015 (2) TMI 794 - BOMBAY HIGH COURT where it was held that The liability to pay interest arises on any amount payable to Central Government and consequent to order for final assessment under Rule 7 subrule (3). Appeal allowed - decided in favor of appellant.
Issues Involved:
Interpretation of Rule 7(4) of Central Excise Rules, 2002 regarding the liability to pay interest on amounts payable to the government after final assessment in cases of provisional assessment. Analysis: The main issue in the present appeal was whether interest is payable under Rule 7(4) of Central Excise Rules, 2002 immediately from the next month to the provisional assessment directed by the department or after finalization of the provisional assessment on determination of the duty. The appellant relied on the judgment of the Hon'ble Bombay High Court in CEAT Ltd. vs. CCE case, which was later upheld by the Supreme Court. On the other hand, the Revenue cited a judgment of the Hon'ble Allahabad High Court in Bharat Heavy Electricals Ltd. case, which favored the Revenue's stance that interest is leviable after one month from the date of provisional assessment. The Tribunal analyzed Rule 7(4) which states that interest is payable on any amount to the Central Government after final assessment under sub-rule (3), from the first day of the month succeeding the month for which the amount is determined till the date of payment. The Tribunal referred to the Bombay High Court's interpretation that interest is not attracted if the final assessment results in nothing due and payable to the government. The Tribunal also compared Rule 7(4) with Section 18(3) of the Customs Act, 1962, highlighting the difference in the timing of interest payment between the two provisions. The Tribunal emphasized the importance of the Bombay High Court's judgment in CEAT Ltd.'s case, which was upheld by the Supreme Court, making it binding on the Tribunal over the judgment of the Allahabad High Court. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief as per law. The Tribunal's decision was based on the interpretation of Rule 7(4) and the precedence set by the higher courts, ensuring consistency and adherence to established legal principles in tax matters.
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