COMMISSIONER OF CENTRAL EXCISE Vs. HINDUSTAN ZINC LTD.

JUDGEMENT

(1.) THIS appeal is directed by the Revenue against the order of the Commissioner (Appeals) setting aside the order -in -original by which while finalizing the assessment in respect of zinc and lead concentrate transferred to assessee's own units during the financial year 2002 -2003 under Rule 7 of the Central Excise Rules, 2002, it was found that the assessee had paid excess duty of Rs. 1,32,67,052/ - during the period from 1.5.2002 to 31.3.2003, but during April, 2002 they had short paid central excise duty amount of Rs. 14.08,448/ -, and held that for the excess duty paid the assessee was entitled to resort to the provisions of Rule 7(5), which they did not want to opt, and for interest not paid on the short payment of duty, the assessee was directed to deposit the amount of Rs. 14,08,448/ -

(2.) THE assessee had applied on 26.7.2002 for provisional assessment under Rule 7 of the Central Excise Rules, 2001, on the ground that they were clearing/transferring their product to their own units situated all over India at the estimated prices, since the prices of the concentrate were not known to them. The assessee was allowed to clear the goods on provisional basis by order dated 30.9.2002 subject to usual condition of bond and security. The assessee availed of this facility under the old Rule 9B of the Rules, 1944, and thereafter under the new rules in view of the extension for the facility given upto 31.8.2003. Thereafter, in the final assessment, the assessing authority took into account the details of the goods cleared/transferred during the period from 1.4.2002 to 31.3.2003, the differential duty charts submitted by the assessee, and other relevant record including cost sheet etc. It was found that the assessee had paid central excise duty in excess to the tune of Rs. 1,32,67,052/ - during the period from 1.5.2002 to 31.3.2003. However, from April 2002, the assessee had short paid the excise duty to the tune of Rs. 14,08,448/ -, which was actually deposited by them on 2.5.2002. It was held that the interest on that account for two days as required under Rule 7(4) of the Central Excise Rules, 2002 was yet to be deposited by the assessee. Thus, the whole controversy in this case is centering around the interest for two days on the amount of Rs. 14,08,448/ -. This interest amount was directed to be deposited by the order -in -original, but the learned Commissioner (Appeals) found that such demand of interest was not maintainable under Rule 7(4) of the said rules and, therefore, set aside the order.

(3.) THE learned authorized representative for the department submitted that Rule 7(4) was squarely applicable where the final assessment was done in the matters where provisional assessment was allowed. He submitted that the words "from the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof occurring in Rule 7(4) of the said rules enabled the assessing authority to direct separate payment of interest which was short paid. In the present case, according to him, since the differential duty amount was short paid in April 2002 by two days, interest was payable under Sub -rule (4) of Rule 7, notwithstanding the fact that the assessing authority had determined that there was excess payment of Rs. 1,32,67,052/ - for which it was open to the assessee to resort to the provisions for refund claims and interest thereon. The learned authorized representative contended that the provisions of Rule 8, relating to manner of payment particularly Sub -rule (3) thereof, were not attracted in cases where provisional assessments were finalized and the interest on the duty amount short paid, which could be worked out at the final assessment, was payable under Sub -rule (4) of Rule 7. The learned Counsel appearing for the assessee, on the other hand, submitted that as per Rule 7(4) of the said rules, interest could be claimed only in the context of the amount determined under the final order. He also submitted that where the differential duty amount was finalized, the short payment of Rs. 14,08,448/ -came down to Rs. 1,14,852/ - and this contention was specifically raised before the Commissioner (Appeals) as can be seen from paragraph 4(v) of his order. He submitted that, however, since the matter was decided on the ground that Rule 7(4) did not warrant charging of such interest in view of the entitlement of refund, the assessee has not pursued that aspect of the actual duty short paid having been worked out finally to Rs. 1,14,852/ -. 4.1 The learned Counsel relied upon the following decisions in support of his contentions: