2017 (9) TMI 409 - AT - Central Excise

Liability of interest - amount paid by appellant prior to the finalization of provisional assessment - Held that - issue is covered by the decision in the case of CEAT Limited Versus The 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). The liability to pay interest on any amount payable to Central Government consequent to order for final assessment is not a situation to be found in the present case - the demand of interest cannot be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against confirmation of demand of interest in respect of amount paid prior to finalization of provisional assessment.

Analysis:
The appellant, M/s. Mahindra & Mahindra, appealed against the demand of interest on the amount paid before finalization of provisional assessment. The appellant cited a judgment by the Hon'ble Bombay High Court in CEAT Ltd. vs. CCE, Nashik 2015 (317) ELT 192 (Bom.) which was relevant to the issue at hand. The Hon'ble High Court of Bombay in CEAT Ltd. observed that the liability to pay interest arises on any amount payable to the Central Government consequent to the order for final assessment under Rule 7 sub-rule (3). The Court emphasized that if the final assessment results in nothing due and payable to the Government, there is no justification to recover interest. The Court highlighted that the interest is not payable merely on equitable considerations and must be in accordance with the stipulations in the Rules. The Court also discussed the application of Section 11A and Section 11AB of the Act in determining the liability to pay interest. The judgment underscored the importance of specific provisions for recovery of interest and the conditions under which interest becomes payable.

The Tribunal, after considering the judgment and the legal provisions, concluded that the demand of interest in the present case cannot be sustained. The Tribunal found that the circumstances of the case did not warrant the imposition of interest on the amount paid by the appellant before the finalization of the assessment. Consequently, the appeal by M/s. Mahindra & Mahindra was allowed, and the demand of interest was set aside. The judgment was pronounced in court on 9.8.2017.