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TMI Blog2024 (8) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods manufactured by them could be finalized only after conclusion of the accounting year and the costing were to be carried out as the same was allowed by the Department. The period involved is 2008-09 & 2009-10. On receiving the relevant data, the appellant approached the Department for finalization of assessment. The Department raised objection for non-inclusion of the value of royalty paid by the appellant pursuant to an agreement with M/s. Toyota Motor Corporation, Japan, in computing the cost production under CAS-4 method, show-cause notice was issued on 09.04.2010 for the FY 2008-09 proposing to add the amount of royalty of Rs.5,55,72,586/- paid and duty of Rs.77,80,162/- demanded with interest. Similarly for the year 2009-10, amount of royalty of Rs.6,59,23,976/- paid and duty of Rs.35,75,944/- demanded with interest. On finalization of the assessment, the adjudicating authority added the payments made towards royalty and finalized the assessment after appropriating the duty short-paid and directed payment of interest under Section 11AB of the Central Excise Act, 1944. The appellant challenged the orders before the learned Commissioner(Appeals), who in turn, rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and on the contrary the interest was payable only on net difference viz., Rs.30,49,570/-. In the case of second appeal in E/936/2012, there was excess duty paid (net difference) upon finalisation and hence no interest is demandable. * The revenue has not accepted the above contention/plea of the Appellant and has confirmed the demand of interest only on differential duty ordered ignoring the excess provisional duty paid in respect of some of the goods. Hence, the present appeals. 1. The Appellant submits that the issue involved in both the appeals are no longer res integra inasmuch in the Appellant's own case for the earlier period (viz., 2007-08), the Honorable Karnataka High Court as reported as Toyota Kirloskar Auto Parts Pvt Ltd v. CCE, LTU, Bangalore, [2012 (276) ELT 332 (Kar.)] has held in favour of the Appellant and held that interest u/r 7(4) of the CER, 2002 is payable only when differential duty is payable after adjusting the excess payment made in respect of other goods. If there is no short-fall after such adjustment, no interest is payable u/r 7(4). The impugned orders are therefore not tenable.The Appellant further submits that the impugned order(s) is also oppose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as discussed the manner of netting to be done while finalization of the provisional assessment. In the said judgment, it is observed that the authority should have deducted the shortfall in the excess payment made; if there is no shortfall in payment of duty, payment of interest does not arise. The said order directs the authorities to take action of netting of duty excess paid and duty short-paid by the appellant on the goods considered for provisional assessment. The said decision is applicable where either the duty is due to the Department or duty is to be refunded to the assesse (excess paid) but in this case, there is no such duty that is due to the Appellant either by way of refund after finalization of provisional assessment in view of the fact that that differential duty was paid prior to finalization and they had undertaken that they will not be seeking / claiming the excess duty paid by them. Also, the duty so paid was taken by their other Unit as credit and utilized. That is the reason why the authorities have appropriated the differential duty paid by them and had demanded the interest on delayed payment of duty. Since the differential duty has already been paid, nettin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the Hon'ble High Court of Karnataka in their own case. The Revenue on the other hand vehemently argued that on finalization of assessment, the duty short-paid automatically attracts interest from the succeeding month of the clearance of the goods assessed provisionally as per Rule 7(4) of the Central Excise Rules, 2002. In support, they have referred to the judgment of the Hon'ble Supreme Court in the case of Steel Authority of India Ltd. (supra) which has later been followed in Bharat Heavy Electricals Ltd.'s case. 8. Sub-rule 4 of Rule 7 of Central Excise Rules, 2002 reads as follows:- Rule 7(4): The assessee shall be liable to pay interest on any mount payable to Central Government, consequent to order for final assessment under sub-rule 3 at the rate specified by the Central Government by notification issued under Section 11AA or Section 11AB of the Act from first day of the month succeeding the month for which such amount is determined, till the date of payment thereof. 9. This rule has been interpreted and the liability to discharge interest on finalization of provisional assessment considered by the Hon'ble Supreme Court in Steel Authority of India Ltd.'s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is amenable to upward revision. He deliberately chooses not to go in for provisional assessment. Thereafter, he pleads that though he was aware that the value is not fixed and the prices on removal was tentative and was amenable to change since he has paid duty on the tentative value he is not liable to pay interest on the value of the goods on the differential duty which he is admittedly liable to pay. Is it contemplated? ........................................................................... 50. We have also noticed what happens if there is provisional assessment. In the case of provisional assessment, the assessee entertains a doubt regarding the actual value or the rate of duty. He applies and he is permitted under the order to remove goods on a provisional assessment. The assessment is thereafter finalized. When the provisional assessment is finalized, the assessee becomes liable however to pay interest from the first date of the month succeeding the month for which the amount is determined. We have no doubt in our mind that under Rule 7(4), the expression "succeeding the month for which such amount" is determined refer to the month of removal of the goods. When t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances resorts to provisional assessment upon a final determination of the value consequently, the duty and interest dates back to the month "for which" the duty is determined. Duty and interest is not paid with reference to the month in which final assessment is made. In fact, any other interpretation placed on Rule 8 would not only be opposed to the plain meaning of the words used but also defeat the clear object underlining the provisions. It may be true that the differential duty becomes crystallised only after the escalation is finalized under the escalation clause but it is not a case where escalation is to have only prospective operation. It is to have retrospective operation admittedly. This means the value of the goods which was only admittedly provisional at the time of clearing the goods is finally determined and it is on the said differential value that admittedly that differential duty is paid. We would think that while the principle that the value of the goods at the time of removal is to reign supreme, in a case where the price is provisional and subject to variation and when it is varied retrospectively it will be the price even at the time of removal. The fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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