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2015 (9) TMI 404 - HC - Central ExciseLevy of interest on payment of differential duty - valuation - clearance of goods on provisional price basis without opting for provisional assessment - assessee submitted an explanation in which it was submitted that sub-rule (4) of Rule 7 makes it clear that the interest payment arises only from the first day of the month succeeding the month for which such amount is determined and according to the assessee, it was to be determined from the date of finalization of the provisional assessment and not the date of payment of final duty, it was submitted that neither interest nor penalty is leviable and accordingly, it was requested that the proceeding be dropped - Held that - In our view, under sub-rule (4) the interest arises only from the first day of the month succeeding the month for which such amount is determined till the date of payment thereof and in our view, it is very clear and unambiguous that the interest liability arises only upon determination of the value or the duty by the adjudicating authority and only after determination this liability arises. In our view, merely because an application was not moved to the Assessing Officer and which the respondent-assessee did not move on such fact, no interest would be leviable nor penalty can be said to be leviable, though requirement of the Act/Rule needs to be fulfilled but in this particular case, it would be too technical to come to the said conclusion that the application was not moved by the assessee and it becomes fatal. - Demand of interest and penalty set aside - Decided in favor of assessee.
Issues:
1. Assessment of interest and penalty under Rule 7 of the Central Excise Rules, 2002 for non-compliance with provisional assessment procedures. Analysis: The case involved a dispute regarding the assessment of interest and penalty under Rule 7 of the Central Excise Rules, 2002. The respondent-assessee, engaged in the manufacture of Optical Fibre Cable/Optical Fibre, had cleared its products to a government undertaking on provisional prices. Subsequently, when final rates were approved, the assessee raised supplementary invoices for differential values and paid differential duty. The issue arose as the assessee did not request the Assessing Officer for allowing clearances on a provisional basis as required by Rule 7. A show cause notice was issued for levying interest and penalty. The Assessing Officer imposed interest and a personal penalty under Rule 7(4) and Rule 27, respectively. The assessee contended that interest payment arises only after finalization of provisional assessment, not at the time of payment of final duty. The Commissioner (Appeals) accepted the contention that when the entire duty amount was paid before the show cause notice, penal provisions could not be invoked. The Commissioner (Appeals) held both interest and penalty not sustainable. The revenue appealed to the Tribunal, which upheld the Commissioner's decision. The appellant argued that interest was correctly levied as the assessee did not follow the procedure under Rule 7. The High Court analyzed Rule 7 of the Central Excise Rules, emphasizing that interest liability arises only upon determination of value or duty by the adjudicating authority. The Court found that the interest arises from the first day of the month succeeding the determination till the payment date. The Court noted that the failure to move an application to the Assessing Officer did not automatically make interest or penalty leviable. The Court concluded that the case was decided based on factual findings by the Commissioner (Appeals) and the Tribunal, and no substantial question of law arose. The Court dismissed the Central Excise Appeal, stating it lacked merit due to the insignificant amount involved.
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