2002 (6) TMI 519 - AT - Central Excise

Interest not payable on finalisation of provisional assessment - Payment of excise duty in instalments after finalisation of provisional assessment

Summary

Issues:
1. Differential duty payment and detention of goods
2. Calculation of interest on differential duty
3. Legal provisions related to interest and detention of goods

Issue 1: Differential duty payment and detention of goods

The appeal was filed by M/s. Kitply Industries Ltd. against an Adjudication Order determining a differential duty of Rs. 1,37,49,625 payable by them. The goods valued at Rs. 1,43,51,788 were detained by the Department in their bonded warehouse. The Appellants requested withdrawal of the detention order or adjustment of the goods' value towards the duty. Despite repeated representations, the Department demanded payment with interest in 36 installments. The High Court directed reconsideration of the matter, leading to the Commissioner's order for duty payment in installments and execution of a bond for goods' release.

Issue 2: Calculation of interest on differential duty

The Appellants contested the imposition of interest on the duty, arguing it was inequitable and not supported by relevant legal provisions. They highlighted that interest was not payable under Rule 9B of the Central Excise Rules and Section 11AA of the Central Excise Act did not apply as duty was determined under Rule 9B (5). The Department insisted on interest as the duty was not paid promptly after finalization of provisional assessments.

Issue 3: Legal provisions related to interest and detention of goods

The Tribunal noted that the Department detained the goods without taking steps to sell them for revenue recovery, depriving the Appellants of economic activities. It emphasized that interest on delayed duty payment is chargeable under Section 11AA, which was not applicable in this case. The Tribunal ruled in favor of the Appellants, ordering the release of goods on bond execution, payment of duty in 36 installments, and no interest for the past period. Interest was to be paid on the reduced duty amount from August 2002 onwards, ensuring justice and compliance with legal provisions.

This judgment addressed the issues of differential duty payment, interest calculation, and legal provisions governing interest and detention of goods, providing a detailed analysis of the parties' arguments and legal framework to arrive at a fair and just decision benefiting the Appellants.