2001 (5) TMI 96 - AT - Central Excise

Summary

Issues:
Dispute over classification of products, resort to provisional assessment under Rule 9B, demand for duty, appeal against classification order, demand for interest under Section 11AA.

Analysis:
1. The dispute arose concerning the classification of products manufactured by the appellant, leading to provisional assessment under Rule 9B. The Range Superintendent demanded duty on RT12's on 30-3-1993, which the appellant did not pay as they appealed against the classification order. The differential duty was paid only after the CEGAT decision on classification, resulting in a demand for interest under Section 11AA from 26-8-1995 to 30-3-1997. The Commissioner (Appeals) upheld the interest demand, prompting the present appeal against it.

2. (a) The Tribunal found that the demand made by the Superintendent on RT12's completion cannot be construed under Rule 173-I read with Section 11A. The Supreme Court precedent established that no notice under Section 11A is required when the duty assessed by the assessee is less than the proper office's assessment. As the assessments were provisional and finalized by the Range Superintendent, any short payments after the Tribunal's final order could be recovered by serving a notice under Section 11A.

(b) Section 11AA, introduced in 1966, imposes interest if duty is not paid within 3 months of determination under Section 11A(2). Since no determination under Section 11A(2) occurred in this case, the demand for interest is not justified.

(c) The Tribunal noted that in a similar case at the appellant's factory in Pondicherry, the demand for interest was dropped. The C&AG report also supported this stance, emphasizing that interest under Section 11AA is applicable only when duty is demanded under Section 11A(2). The interpretation by the Ministry of Finance, Dept. of Revenue on interest under Section 11AA for provisional assessments is considered binding and correct.

3. Based on the above analysis, the Tribunal found no merit in the lower authorities' orders and set aside the demand for interest under Section 11AA, thereby allowing the appeal.