2018 (2) TMI 534 - AT - Central Excise

Demand of interest on differential duty - finalization of provisional assessment - rule 7(4) of Central Excise Rules, 2002 read with section 11AA of Central Excise Act, 1944 - price variation clause - Held that - Under rule 7(4) of CER 2002 (as it existed before 1st March 2016), the finalization of provisional assessment yielding differential duty would obligate the assessee to pay interest between the date of such determination and the date of payment. A plain reading of this provision does not confer jurisdiction to demand interest from the date of invoice - The appellant has discharged the liability to differential duty liability by raising supplementing voices and the finalization of provisional assessment was merely a confirmation of the differential duty leviable. Reliance placed in the case of CEAT Limited v, Commissioner of Central Excise & Customs, Nashik 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). Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of interest liability date - original invoice or supplementary bill.

The judgment by the Appellate Tribunal CESTAT, Mumbai involved a dispute by M/s Crompton Greaves Ltd against an order affirming a demand of differential duty and interest under rule 7(4) of Central Excise Rules, 2002. The issue revolved around the date from which the interest liability sets in - whether from the original invoice or the supplementary bill. The Tribunal analyzed the provisions of rule 7(4) and concluded that interest liability arises between the determination of provisional assessment and the date of payment, not from the date of the original invoice. The Tribunal referred to a decision by the Hon'ble High Court of Bombay in CEAT Limited v. Commissioner of Central Excise & Customs, Nashik, emphasizing that interest is payable on any amount due to the government after final assessment. The Tribunal highlighted that the liability to pay interest is not a situation found in cases where the final assessment results in nothing due and payable to the government, as per the ruling in CEAT Limited. The judgment also criticized the Tribunal for disregarding binding precedents and emphasized the importance of lower courts accepting and following decisions of higher courts. Ultimately, the Tribunal found no merit in the lower authorities' orders, set aside the impugned order, and allowed the appeal.

In conclusion, the judgment clarified the applicability of interest liability under rule 7(4) of the Central Excise Rules, emphasizing that interest arises post final assessment and not from the original invoice date. The ruling also underscored the significance of lower courts adhering to decisions of higher courts, ensuring a hierarchical judicial system's integrity.