2024 (9) TMI 1246 - AT - Central Excise

Entitlement to interest on excess duty paid during provisional assessment period - whether the appellant is entitled to interest of Rs.1,15,23,115/- on finalisation of provisional assessment for the period 2002-03 to 2009-10 on the amount of excess duty paid by the appellant? - HELD THAT - It is found that pursuant to the finalisation of provisional assessment, after adjustment of the duty paid, the liability has been calculated in the respective orders. However, since the method for calculation of interest i.e. whether interest be calculated after expiry of one month from the due date of payment of duty or the date on finalisation of the provisional assessment of the duty liability be taken into consideration, was in dispute and pending before the honourable High Court of Karnataka in COMMISSIONER OF C. EX., MYSORE-I VERSUS JK. INDUSTRIES LIMITED 2011 (3) TMI 373 - KARNATAKA HIGH COURT , the quantum of interest on the excess duty paid by the appellant and also interest due on the duty short paid could not be calculated and kept pending. On finalisation of the pending issue by the aforesaid judgement, the applicant approached the Department informing the amount of interest on the excess duty paid during the period 2002-03 to 2009-10 applying the said formula is Rs.1,15,84,533/- and the interest payable to the Government on duty short paid is Rs.63,71,217/-. The appellant requested to adjust the interest due to the Government against interest payable to the appellant, and to refund balance amount after adjustment. The authorities below had rejected the said claim on the ground that the final order computing the duty has not been challenged and therefore the interest cannot be released to them after the order of the Hon ble High Court. Since the appellant had paid the interest due to the Government amounting to Rs.63,71,217/- for the said period in absence of any demand notice to them, there is no valid reason not to release/refund the interest amount of Rs.1,15,84,553/-to the appellant on the excess duty paid during the period in question when the issue of relevant date for computing interest amount on finalisation of provisional assessment settled by the Hon ble Karnataka High Court. The impugned order is set aside and appeal is allowed.

Summary

Issues:
Entitlement to interest on excess duty paid during provisional assessment period.

Analysis:
The appeal was filed against an order passed by the Commissioner of Central Excise(Appeals), Mangalore, rejecting the claim for interest on excess duty paid. The appellant, engaged in tyre manufacturing, opted for provisional assessment due to valuation challenges. The issue arose when the interest on excess duty paid was not calculated and refunded pending resolution of the relevant date for interest calculation by the High Court. The appellant sought interest of Rs.1,15,84,533/- on the excess duty paid. The adjudicating authority and Commissioner(Appeals) rejected the claim, leading to the present appeal.

The appellant's advocate argued that interest should be calculated from the first day of the month when duty is determined, not from the finalization of assessment, citing a judgment by the Larger Bench of the Tribunal and a subsequent High Court decision. The appellant requested adjustment of interest due to the Government against the interest payable to them. Despite paying Rs.63,71,217/- as interest to the Government, the appellant claimed Rs.1,15,84,533/- as interest due on the excess duty paid. The Revenue did not dispute the facts but supported the Commissioner(Appeals) findings.

The Tribunal found that the interest calculation method was in dispute pending High Court resolution, resulting in non-calculation of interest on excess duty paid. The High Court clarified that interest is payable from the due date of duty payment, not from the final assessment date. Therefore, the appellant was entitled to interest on excess duty paid. The Tribunal held that the authorities' rejection of the claim based on unchallenged duty computation orders was unfounded, as the interest calculation was pending due to the unresolved issue. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

In conclusion, the appellant's entitlement to interest on excess duty paid during the provisional assessment period was upheld by the Tribunal based on the High Court's clarification on the relevant date for interest calculation. The Tribunal emphasized that the interest should be calculated from the due date of duty payment, not the final assessment date, leading to the allowance of the appeal and the refund of the interest amount to the appellant.