2024 (6) TMI 1001 - AT - Central Excise

Liability of differential duty on account of finalisation of provisional assessment - liability of interest under Section 11AB of the Central Excise Act, 1944 - requirement to issue SCN when the differential duty has already been paid in terms of Rule 9B(5) - HELD THAT - Admittedly, the differential Excise Duty payments arose under provisions of Rule 9B(5) of CEA, 1944 during the period under consideration. As can be observed from the extracts of Rule 9B(5), there are no provision for recovery of interest when the differential duty is paid. In case of SERAI KELLA GLASS WORKS PVT. LTD. VERSUS COLLECTOR OF C. EXCISE, PATNA 1997 (4) TMI 74 - SUPREME COURT , which has been relied upon by the lower authority, in fact supports the case of the Appellant. It has been held therein that after final assessment, there is no need to give any further notice under Section 11A for recovery of differential duty amount. Precisely for this reason, the Commissioner (Appeals) has held that the OIO passed is not proper. Necessity to issue SCN - HELD THAT - There was no necessity to issue any Show Cause Notice under Section 11A as has been rightly held by the Commissioner (Appeals). It is also noted that no further Appeal has been filed by the Revenue against this OIA. Therefore, the issue has reached finality. In such a case, the Commissioner (Appeals) is in error in confirming the interest alone under Section 11AA/11AB when the provisions have come into effect from 11/5/2001 and the provisional Assessment was finalized in terms of Rule 9B(5) of CER, 1944. It is on record that the final assessment has been done in terms of Rule 9B(5) of CEA, 1944. Further, the Department has not come out with any evidence that the belated finalization of assessment in 2008 was due to any delay from the appellant side - there are no merits in the impugned order and the same is set aside - appeal allowed.

Summary

Issues involved:
The issues involved in this case are the finalization of provisional assessments under Rule 9B of the Central Excise Rules, 1944, the demand for payment of differential duty, the appropriateness of charging interest under Sections 11AA and 11AB of the Central Excise Act, 1944, and the appeal against the Commissioner (Appeals) decision.

Finalization of Provisional Assessments and Demand for Payment:
The Appellants cleared their finished goods under provisional assessment during the period May 1991 to March 1994. The finalization of these assessments led to a demand for payment of a differential duty of Rs. 12,40,886. The Appellants paid a portion of this amount and filed an appeal for the balance before the Commissioner (Appeals). The Show Cause Notice issued sought to recover the outstanding amount and charge interest under Section 11AA of the CEA, 1944. The Adjudicating Authority confirmed the demand and directed the Appellant to pay the interest at the appropriate rate. The Commissioner (Appeals) set aside the Show Cause Notice but held that interest was payable from the introduction of interest provisions under Section 11B till the actual payment of duty.

Charging of Interest under Sections 11AA and 11AB:
The Appellant argued that there is no provision under Rule 9B(5) to charge interest for the differential duty when assessments are finalized. They contended that the interest provisions under Section 11AB were introduced after the final assessments were completed, and they were not responsible for any delays. The Appellant cited case law to support their position that interest for delayed payments is not payable when the original assessment is finalized under Rule 9B(5) and when there is no determination of duty under Section 11A of the Central Excise Act, 1944. They argued that the issue had reached finality as the Department did not appeal against the Commissioner (Appeals) decision.

Decision and Rationale of the Tribunal:
The Tribunal observed that Rule 9B(5) does not provide for the recovery of interest when differential duty is paid. Referring to relevant case law, the Tribunal held that after final assessment, there is no need for further notice under Section 11A for the recovery of differential duty. The Tribunal also noted that interest on delayed payment of duty is chargeable only under Section 11AA, and since the duty became payable on finalization of provisional assessments under Rule 9B(5), no interest was leviable for the past period. The Tribunal found that there was no necessity for a Show Cause Notice under Section 11A and set aside the Commissioner (Appeals) decision to confirm interest under Section 11AA/11AB. The Tribunal concluded that the Appellants were not at fault for any delays in finalizing assessments and allowed the appeal, setting aside the decision of the Commissioner (Appeals).