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2015 (11) TMI 87 - CESTAT MUMBAI

2015 (11) TMI 87 - CESTAT MUMBAI - TMI - Interest liability - Provisional assessment - Held that:- Appellant had paid the entire differential duty before the finalisation of the provisional assessment sought. There is no dispute that the provisional assessment were finalised by the authorities on 27.08.2012, after almost two months when the appellant paid the differential duty arising out of such finalisation and there is no difference in duty paid. I find that the first appellate authority has .....

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s well as earlier decision holding that interest is not payable if assessee pays the duty before finalisation, I find the impugned order is unsustainable and liable to be set aside - Decided in favour of assessee. - Appeal No. E/90117/14- Mum - Dated:- 5-6-2015 - Mr. M.V. Ravindran, Member (Judicial) For the Petitioner : Ms. Padmavati Patil, Advocate For the Respondent : Shri H.M. Dixit, AC (AR) ORDER This appeal is directed against Order-in-Appeal No. EXCUS-000-APP-47-14-15 dated 13.10.2014. 2. .....

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ity/ competent authority finalised the assessment on 27.08.2012, the appellant on their own calculated the differential duty payable and paid the same on 28.06.2012. Show-cause notice dated 22.08.2013 was issued demanding interest from the appellant. Appellant contested the matter before the Adjudicating Authority as well as before the first appellate authority, that the interest liability does not arise on them as they have discharged the entire duty before the finalisation took place and relie .....

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. 5.1. Firstly, there is no dispute that the appellant had paid the entire differential duty before the finalisation of the provisional assessment sought. There is no dispute that the provisional assessment were finalised by the authorities on 27.08.2012, after almost two months when the appellant paid the differential duty arising out of such finalisation and there is no difference in duty paid. I find that the first appellate authority has not considered this vital fact in his order and also o .....

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aggrieved by such an order took up the matter to the Hon'ble High Court and their Lordship vide judgment dated 12.10.2010 upheld the Tribunal order. Consequently, this bench in the case of CEAT Ltd. did not follow the judgment of their Lordship in Ispat Industries Ltd. and took a different view, which was carried to the Hon'ble High Court by the appellant, CEAT Ltd. The Hon'ble High Court by order dated 06.02.2015 set aside the judgment of the Tribunal, holding that interest is not .....

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issued under the relevant statutory provision. The interest is payable from the date specified in the later part of sub-rule (4). What the Tribunal found in this case is that the Assessee had before finalizing of the assessment remitted or paid the differential duty. Thus, the assessment provisionally made resulted in payment of that sum and specified in the provisional assessment order. Further, the Assessee volunteered on its own to determine the liability of duty and the amount in that behalf .....

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of the paper book. Then, the Tribunal placed upon its Larger Bench decision in the case of Cadbury India Ltd. (supra) and following it so also that of the High Court of Karnataka dismissed the Assessees Appeal. The relevant finding of the Tribunal at para 13 is that the Assessee has paid the duty before formal finalization order issued by the Deputy/Assistant Commissioner will not make any difference to the legal position. 28. It is in this backdrop that the analysis of the legal provisions of .....

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est is liable to be paid within one month from the date of final assessment order was the conclusion recorded. Therefore, the liability to pay duty is finally determined with the passing of the final assessment order and also the obligation to pay arises only when the Assessee does not pay the duty as per that order. This conclusion was not upheld by the High Court of Karnataka and in the teeth of the language of Rule 7(4). The observations and findings in para 15 would denote that the High Cour .....

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it of one month from the said due date as is clear from Rule 7(4). The order passed by the Tribunal holding that interest is payable after one month from the date of final assessment order is erroneous. This is what the High Court held. In the aforementioned circumstances, when the Larger Bench decision in Cadbury India Ltd. relied upon the aforesaid view of the High Court of Karnataka, it lost sight of the fact that the High Court of Karnataka was considering a somewhat different situation. The .....

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d before us that when a statute levying and imposing tax makes specific provision for recovery of interest on delayed payment only, then, such interest and the liability to pay the same arises. In that regard, the Constitution Bench judgment in the case of J.K. Synthetics Limited v. Commercial Taxes Officer (supra) referred to the Rajasthan Sales Tax Act, 1954. It referred to Section 11B at page 281 of the judgment and at page 282 in para 5 it reproduced sub-sections (2) and (2A) of Section 7. I .....

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is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters. Provision is also made for charging interest on delayed payments, etc. Ordinarily the charging section which fixes the liability is strictly construed but that rule .....

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llect interest, even if construed as forming part of the machinery provisions, is substantive law for the simple reason that in the absence of contract or usage interest can be levied under law and it cannot be recovered by way of damages for wrongful detention of the amount. (See Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji and Union of India v. A.L. Rallia Ram). Our attention was, however, drawn by Mr. Sen to two cases. Even in those cases, CIT v. M. Chandra Sekhar and Central Provinces Ma .....

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ed by the language used and the purpose to be achieved. Therefore, any provision made in a statute for charging or levying interest on delayed payment of tax must be construed as a substantive law and not adjectival law. So construed and applying the normal rule of interpretation of statutes, we find, as pointed out by us earlier and by Bhagwati, J. in the Associated Cement Co. case, that if the Revenues contention is accepted it leads to conflicts and creates certain anomalies which could neve .....

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he facts were that differential duty was paid prior to the date of final assessment. The Division Bench in confirming the view of the Tribunal held as under :- 2. This appeal has been admitted on the following question of law : Whether the CESTAT was right in holding that in terms of the provisions of Rule 7(4), respondent No. 1 could not be held liable to pay the interest on the differential duty as the duty amount has been paid prior to the final assessment, especially when provisions of Rule .....

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