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2023 (12) TMI 306 - AT - Central ExciseChargeability of interest in terms of rule 7 of Central Excise Rules, 2002 following confirmation of demand on finalization of provisional assessment - assessments were rendered as provisional under rule 9B of Central Excise Rules, 1944, the finalization occurred after Central Excise Rules, 2002 came to into effect - HELD THAT - The issue pertaining to leviability of interest on finalization of provisional assessment, in all cases pertaining to clearances prior to 2001, has been set at rest by the Central Board of Indirect Taxes Customs (CBIC) circular no. 354/66/2001-TRU dated 21st June 2021 where it was held that In Rule 7 relating to provisional assessment, provision has also been made for charging of interest or for allowing refund, as the case may be. It may be clarified that these will apply to cases in which provisional assessment is resorted to on or after 1-7-2001 and not to past cases of provisional assessment even if the assessments are finalized on or after 1-7-2001. Furthermore, in another dispute of theirs decided by the Tribunal, in CADBURY INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I 2009 (1) TMI 701 - CESTAT, MUMBAI , it was held that interest will be payable from 1-7-2001 from which date these rules became effective. The Hon ble High Court of Bombay, in M/S. DGP HINODAY INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-1 2012 (3) TMI 327 - BOMBAY HIGH COURT has clearly held that interest liability would arise only when the assessments were made provisional after the new rules came into existence. The impugned order does not sustain and is accordingly set aside - Appeal allowed.
Issues involved: Chargeability of interest in terms of rule 7 of Central Excise Rules, 2002 following confirmation of demand, applicability of circular no. 354/66/2001-TRU, interpretation of previous judicial decisions regarding interest liability on finalization of provisional assessment.
Summary: The appeal by M/s Cadbury India Ltd challenged the order of the Commissioner of Central Excise (Appeals) regarding the chargeability of interest under rule 7 of Central Excise Rules, 2002. The dispute arose from a demand of Rs. 36,07,51,390 on finalization of provisional assessment, with a remaining unpaid amount of Rs. 4,79,41,410. The first appellate authority set aside a portion of the interest, leaving only the interest on the unpaid amount in question. The appellant relied on circular no. 354/66/2001-TRU issued by CBIC, which clarified the application of interest provisions in cases of provisional assessment. Additionally, reference was made to a decision by the Hon'ble High Court of Bombay, emphasizing that interest liability arises only for assessments made provisionally after the new rules came into effect. The Authorized Representative cited a decision by the Hon'ble High Court of Gujarat in support of their argument. The appellant had cleared goods provisionally under rule 9B of Central Excise Rules, 1944, which were later finalized under the Central Excise Rules, 2002. The issue of interest liability on finalization of provisional assessment was addressed by CBIC's circular and a previous Tribunal decision involving the same appellant. Based on the clarification from CBIC and previous judicial determinations, the Tribunal found that the impugned order was not sustainable and accordingly set it aside. (Order pronounced in the open court on 06/12/2023)
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