Commissioner of Central Excise vs Pre-Stressed Udyog (India) (P.) Ltd.

Dhirubhai Naranbhai Patel, J.—In this Tax Appeal the following substantial questions of law have been raised:

"(i) Whether, the assessment made without observing the procedures laid down in rule 7 of the Central Excise Rules, 2002, be considered as provisional?

(ii) Whether interest under sub-rule (4) of the Rule 7 of the Central Excise Rules, 2002 is leviable, even if such assessment is deemed provisional?

(iii) Whether, subsequent payment of differential duty on account of retrospective price escalation of excisable goods shall be deemed to be a case of short assessment and short levy of such goods cleared earlier and, as such interest shall be demandable in terms of Sections 11A and 11AB of the Central Excise Act, 1944?"

It is submitted by counsel for the appellant that the respondent was engaged in manufacturing of pre-stressed sleeper for Railways and for independent buyers. The respondent-assessee entered into a contract with the Railway and there was a Price Escalation Clause which was to neutralize the effect of increase in the value of inputs. The respondent-assessee received differential value of goods at regular interval and paid Central Excise Duty when the calculation is finalized, but, no interest was paid thereupon as required under Rule 7(4) of Central Excise Rules, 2002 to be read with Section 11AB of Central Excise Act, 1944. The respondent-assessee never gave any declaration that there is a Price Escalation Clause in the contract with the Railway. No declaration was ever given by the respondent that the price at which the goods were sold is not final i.e. the price of the goods declared are provisional and, therefore, the respondent was directed to pay interest on differential duty. The respondent had not paid the interest hence a show cause notice dated 23rd April, 2004 was issued alleging therein that the duty paid at a later date from the date of removal of goods attracts interest under section 11AB to be read with Rule 7 of Central Excise Rules, 2002. One more show cause notice dated 26/27.7.2004 was given to the effect that interest of Rs. 40,545/- has been demanded. Both the show cause notices were adjudicated upon and the order in original was passed by Assistant Commissioner, Central Excise, Division IV-Jamshedpur on 7.4.2002. The demand was confirmed as mentioned in both show cause notices against which an Appeal was preferred bearing Appeal No. 193/JSR/CEX/Appeal/2005 which was decided by the Commissioner (Appeal) Customs and Central Excise, Patna vide order dated 06.09.2005 whereby, the Appeal preferred by the respondent was dismissed mainly on the ground that duty paid at a later date from the date of removal of goods and whenever there is a price escalation claimed by the assessee, he ought to have apply for provisional assessment under Rule 7 of the Rule 2002, otherwise, as per Rule 7(4) also there is provision for taking interest upon late payment of Central Excise Duty. Against the said order an Appeal was preferred by the respondent being Appeal No. ESM-391/2005 before the Custom Excise and Service Tax Appellate Tribunal, Eastern Region Bench, Kolkata (CESTAT). This Tribunal allowed the Appeal upon the assessment that as the respondent-assessee had paid the differential duty after receiving the price escalation the earlier assessment was provisional in nature. This presumption is unwarranted and uncalled for as submitted by the counsel for the appellant. There is nothing like such deeming provision, neither in the Central Excise Act nor under the Rules. Counsel for the appellant has relied upon decisions rendered by the Hon''ble Supreme Court in Commissioner of Central Excise, Pune Vs. SKF India Ltd., and Metal Forgings and Another Vs. Union of India (UOI) and Others, . It is submitted by counsel for the appellant that in view of these decisions and rule 7(1) and 7(4) of the Rules, 2002 to be read with Section 11AB as there was no application preferred by the respondent for provisional assessment and as there is no deeming provision for provisional assessment and as the respondent had paid duty at a much belated stage after removal of the goods, the respondent-assessee is bound to make payment of interest and, therefore, the substantial questions of law may be answered accordingly.

Counsel appearing on behalf of respondent submitted that no error has been committed by the CESTAT, Kolkata in allowing the Appeal preferred by the respondent. What will be the price escalation was not known to the respondent-assessee nor it was certain to get the price escalation. Moreover, the respondent has already paid the differential duty no sooner did the price escalation has been received by the respondent. These aspects of the matter have been properly appreciated by the CESTAT, Kolkata and hence, this Appeal may not be entertained by this Court as no substantial question of law is involved in this Tax appeal even otherwise also the amount involved in this Appeal is less than 50,000/- (fifty thousand) so this Appeal may not be entertained by this Court.

REASONS:

Having heard counsel for both sides and looking to the facts and circumstances of the case, it appears that the respondent is manufacturing Pre-stressed Sleeper for Railway and for independent buyers. The respondent has entered into a contract with Railway to supply pre-stressed sleeper having clause of Price Escalation to neutralize the effect of increase in the value of inputs. It further appears from the facts of the case that respondent received differential value of the goods of escalated price at regular interval.

The respondent paid differential duty much later from the date of removal of goods and, therefore, demand was made about payment of interest as per Section 11AB of the Central Excise Act, 1944 to be read with Rule 7(4) of the Central Excise Rules, 2002, but, the same was not paid as such, two show cause notices were issued.

On receipt of payment of escalated price the respondent paid the duty at later stage, but, has not paid the interest for which a show cause notice No. 1 dated 23.4.2004 has been given, which is as under:

The second show cause notice dated 26/27th July, 2004 and late payment of Central Excise duty and interest calculated is as under:

Rule 7(1) and 7(4) of the Central Excise Rules, 2002 reads as under:

"Rule 7(1) When the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in writing giving."

"Rule 7(4) The assessee shall be liable to pay interest on any amount 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 the first day of the month succeeding the month for which such amount is determined, till the date of payment thereof."

In view of the aforesaid provisions the respondent-assessee has never applied for provisional assessment nor the respondent has ever pointed out that there is a Price Escalation Clause in the contract and the respondent assessee is going to get a price escalation and, therefore, as per Rule 7(1) it cannot be said that the earlier assessment was provisional in nature. This aspect of the matter has not been properly appreciated by the CESTAT, Kolkata while allowing the appeal preferred by the respondent against order in Appeal. Moreover, there is nothing like such deeming provision under the Act or under the Central Excise Act nor under the Rules, 2002. Moreover, the respondent is getting price escalation on different intervals. This price escalation is never automatic. Respondent has to apply price escalation and thereafter he will get the price escalation. Thus, the respondent knows very well that he has to prefer application for price escalation and therefore he should have preferred an application under rule 7(1) for provisional assessment, but, the respondent has failed to point out such price escalation nor he had ever applied for provisional assessment. These facts are admitted facts. It is also admitted fact that differential duty was paid at later stage after recovery of the goods.

As a cumulative effects of these two facts the respondent is bound to make payment of interest upon delayed payment of differential duty under Section 11AB of the Central Excise Act. This aspect of the matter has also not been properly appreciated by the CESTAT, Kolkata.

Even otherwise also as per Rule 7(4) even in the case of provisional assessment there is a provision for payment of interest upon delayed payment of the duty and therefore, even if the respondent would have applied for provisional assessment and such application would have been allowed under Rule 7(1) of the Rules, 2002, the respondent was liable to make payment of the interest upon Rule 7(1) and 7(4) of the Rules, 2002. Thus, in any case i.e. even in the case of provisional assessment and even in the case of normal assessment whenever there is a delayed payment of duty, after removal of the goods, the assessee is bound to make payment of interest.

It is true that in this Tax Appeal the amount involved is less than Rs. 50,000/- (Rs. Fifty thousand). Nonetheless, price escalation clause in the contract is now a common phenomena. Those who are manufacturing goods and supplying the same to the Government or to the instrumentalities of the Government, there is a Price Escalation Clause. There are chances of getting more price to nullify the effect of increase in the value of inputs. In all such type of cases it ought to be kept in mind that under section 11AB to be read with rule 7(1) and 7(4) of the Rules, 2002, if there is delayed payment of the duty the assessee is bound to make payment of interest. There is also a penalty for such type of fault committed by respondent-assessee and therefore, even if the amount involved in this case is much lessor we are deciding this Appeal because it will effect several other cases.

It has been held by the Hon''ble Supreme Court in the case of Metal Forgings (supra) at Paragraph Nos. 11 and 12 which reads as under:

''11. The next question for our consideration is whether the order made by the Assistant Collector on 22-01-1976 could be treated as a provisional classification so as to keep the period of limitation frozen. The Judicial Member in this regard came to a definite conclusion that the said order is a final order against which appeals and revisions were taken recourse to. According to the learned Member merely because there is a continuing dispute in regard to the correctness of the said order of the Assistant Collector by way of appeals and revisions, the same, does not make the order of the Assistant Collector anything short of a final order, therefore, he rejected the contention of the Revenue on this count. While the Technical Member and the Third Member following the judgment of this Court in the case if Samrat International (supra) came to the conclusion that the order of the Assistant Collector could be treated as a provisional order because there was correspondence regarding the excisability and the classification list filed by the appellants. From the above we notice that the majority of the members of the Tribunal based their finding that the clearances made by the appellants during the relevant period was provisional in nature mainly because of the finding of this Court in the case of Samrat International (supra). A perusal of this judgment shows that the said judgment was delivered on the peculiar facts of that case and it does lay down a principle in law which enables the Revenue to treat every classification made by it or the goods removed by virtue of said classification to be treated as the provisional merely because some appeal or other proceeding is pending questioning the classification involved therein. As a matter of fact, this Court in the case of Coastal Gases & Chemicals (P.) Ltd. v. Asstt. CCE, Visakhapatnam (supra) while considering the judgment in Samrat International, Case (supra) held thus:

"On the facts of that case, however, this Court had held that the payment of duty which was made by the appellants in that case was provisional and the procedure under Rule 9B had been followed. We have not been shown any material on record to indicate whether the appellants in the present case had cleared carbon dioxide manufactured by them by following the procedure laid down in Rule 9B or that the payment of excise duty which the appellants had made during the relevant period was provisional."

From the above, it is clear that to establish that the clearances were made on a provisional basis, there should be first of all an order under Rule 9B of the Rules, and then material to show that the goods were cleared on the basis of said provisional classification. These facts in the instant case are missing, therefore in our opinion there is no material in the instant case to establish the fact that either there was a provisional classification or there was an order made under Rule 9B empowering the clearances on the basis of such provisional classification. In the absence of the same, we cannot accept the argument of the Revenue that in fact the order of the Assistant Collector dated 21-1-1976 is a provisional order based on which clearance was made by the appellants or that they paid duty on that basis. On the contrary, as held by the Judicial Member the said order of classification was a final order, therefore, the Revenue cannot contend the limitation prescribed under Section 11A does not apply.''

In view of the aforesaid decisions whenever the goods are removed earlier and the duty are paid later, the manufacturer of the goods is bound to make payment of interest upon delayed payment of Central Excise Duty and whenever clearance of the goods were made on provisional basis there should be an order passed by the Central Excise authority. In the facts of the present case, there is no such type of order passed by the Central Excise authority for removal of goods on provisional decision nor for provisional assessment any application has been preferred. It has been held by the Hon''ble Supreme Court in the case of SKF India Ltd. (supra) in paragraph Nos. 11 to 14, 17 and 18 are as under:

''11 Section 11A puts the cases of non-levy or short-levy, non-payment or short-payment or erroneous refund of duty in two categories. One in which the non-payment or short-payment, etc. of duty is for a reason other than deceit; the default is due to oversight or some mistake and it is not intentional. The second in which the non-payment or short-payment, etc. of duty is "by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty"; that is to say, it is intentional, deliberate and/or by deceitful means. Naturally, the cases falling in the two groups lead to different consequences and are dealt with differently.

Section 11A , however allow the assessees-in-default in both kinds of cases to make amends, subject of course to certain terms and conditions. The cases where the non-payment or short-payment, etc. of duty is by reason of fraud, collusion, etc. are dealt with under sub-section (1A) of Section 11A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2B).

Sub-section (2B) of Section 11A provides that the assessee-in-default may, before the notice issued under sub-section (1) is served on him, make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and inform the Central Excise Officer in writing about the payment made by him and in that event he would not be given the demand notice under sub-section (1). But Explanation 2 to the sub-section makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11AB, that is, for the period from the first date of the month succeeding the month in which the duty ought to have been paid till the date of payment of the duty.

What is stated in Explanation 2 to sub-section (2B) is reiterated in Section 11 AB that states where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who has paid the duty under sub-section (2B) of Section 11A , shall, in addition to the duty, be liable to pay interest.... It is thus to be seen that unlike penalty that is attracted to the category of cases in which the non-payment or short-payment, etc. of duty is "by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty", under the scheme of the four Sections (11A , 11AA , 11AB and 11AC ) interest is leviable on delayed or deferred payment of duty for whatever reasons. The payment of differential duty by the assessee at the time of issuance of supplementary invoices to the customers demanding the balance of the revised prices clearly falls under the provision of sub-section (2B) of Section 11A of the Act.

We are unable to subscribe to the view taken by the High Court in Rucha Engg. It is to be noted that the assessee was able to demand from its customers the balance of the higher prices by virtue of retrospective revision of the prices. It, therefore, follows that at the time of sale the goods carried a higher value and those were cleared on short-payment of duty. The differential duty was paid only later when the assessee issued supplementary invoices to its customers demanding the balance amounts. Seen thus, it was clearly a case of short-payment of duty though indeed completely unintended and without any element of deceit, etc. The payment of differential duty thus clearly came under sub-section (2B) of section 11A and attracted levy of interest under Section 11AB of the Act.

For the reasons discussed above we set aside the judgments and orders passed by the Tribunal and the Commissioner (Appeals). We restore the order passed by the Assistant Commissioner insofar as charge of interest is concerned. On the facts of the present case there is no question of imposition of any penalty. Hence, that part of the order of the Assistant Commissioner is set aside. In the result the appeals are allowed but with no order as to costs. (Emphasis Supplied)

It has further been held by the Hon''ble Supreme Court in the case of Indian Refrigeration Industries v. CCE [2009] 16 SCC 405 at Paras 11 to 16 which reads as under:

"11. As regards the contention that the demand raised was barred by time, it has been held that the classification list filed by the appellant w.e.f. 1-4-1978 was approved by the Assistant Collector on 17-12-1979 in which the benefit of exemption under Notification No. 71/78 claimed by the assessee was denied, against which the appellant filed an appeal which was allowed and the matter was remanded back to the Assistant Collector by the Collector (Appeals) for de novo consideration. At this stage notice was issued on 4-3-1980 which was within six months of the approval of the classification list i.e. on 17-12-1979. Relying upon a decision of the larger Bench in Rajeev Mardia v. CCE, it was held that the assessments from 1-4-1978 till 17-12-1979 the date on which the classification list was approved remained provisional. The Larger Bench, in the aforesaid case, held as under: (ELT p. 337, para 6)

"6. From the above discussion, we are clear in our mind that Samrat International (P) Ltd. envisages payment of duty on provisional basis pending decision of classification list or price list. For these payments to be treated as provisional, procedure contemplated by Rule 9B is not to be followed. Therefore, we are of the considered view that the observation made by the Larger Bench of five members that there should be material on record to show that procedure laid down in Rule 9B was followed for the purpose of showing that the assessments are provisional, cannot hold good in the case of payments of duty effected pending finalisation of classification list or price list. Subject to this clarification, we agree with the observations and findings arrived at by the said Bench in Miscellaneous Order No. 47/2000-A."

The Larger Bench of the Tribunal had recorded the finding, reproduced above, relying upon a judgment of this Court in Samrat International (P.) Ltd. v. CCE. It has been held in the said case that the assessments made till the approval of the classification list would be deemed to be provisional and, therefore, procedure contemplated by Rule 9B is not required to be followed.

Counsel for the appellant has pointed out that the observations made by this Court in Samrat International (P.) Ltd. were explained in Metal Forgings v. Union of India and it was held that the decision in Samrat International (P.) Ltd. was given on its own peculiar facts and could not be understood to mean that till the classification list is approved, the assessment framed would be treated to be provisional without following the procedure laid down under Rule 9B of the Rules. It was held: (Metal Forgings case, SCC p. 43, para 14)

"14. From the above, it is clear that to establish that the clearances were made on a provisional basis, there should be first of all an order under Rule 9B of the Rules, and then material to show that the goods were cleared on the basis of the said provisional basis, and payment of duty was also made on the basis of said provisional classification. These facts in the instant case are missing, therefore, in our opinion there is no material in the instant case to establish the fact that either there was a provisional classification or there was an order made under Rule 9B empowering the clearance on the basis of such provisional classification. In the absence of the same, we cannot accept the argument of the Revenue that in fact the order of the Assistant Collector dated 22-1-1976 is a provisional order based on which clearance was made by the appellants or that they paid duty on that basis. On the contrary, as held by the judicial member the said order of classification was a final order, therefore, the Revenue cannot contend that the limitation prescribed under Section 11A does not apply."

This decision in Metal Forgings case was approved by a three-Judge Bench of this Court in CCE v. Hindustan National Glass & Industries Ltd.

(refer to the observations made in para 18 of the judgment).

In view of the subsequent judgments of this Court in Metal Forgings case and Hindustan National Glass & Industries Ltd. case the impugned order based on the decision of Samrat International cannot be sustained. The assessment framed till the approval of the classification list on 17-12-1979 cannot be treated to be provisional

Admittedly, in the present case, show-cause notice was issued on 4-3-1980 i.e. much beyond the period of six months as provided under sub-rule (1) of Rule 10 of the Rules. Extended period of limitation had not been invoked in the present case.

On behalf of the appellant, another point raised before the Tribunal was relating to reworking out the assessable value under Section 4(4)(d)(ii) of the Act. The Tribunal did not permit this argument to be raised as the same had not been raised before either of the authorities below. We are not going into this question in view of our finding that the show-cause notice issued to the appellant was beyond the period of six months and therefore barred by time.'' (Emphasis Supplied)

It has been held by the Hon''ble Supreme Court in the case of Commissioner of Central Excise Vs. International Auto Limited, Paras 5, 7 and 8 is under:

"5. We find no merit in the submissions advanced on behalf of the assessee. The controversy arising in this civil appeal is squarely covered by the judgment of this Court in CCE v. SKF India Ltd. We quote hereinbelow relevant observations made in SKF India Ltd., which read as follows: (SCC pp. 467-68, paras 11-17)

''11. Section 11A puts the cases of non-levy or short-levy, non-payment or short-payment or erroneous refund of duty in two categories. One in which the non-payment or short-payment, etc. of duty is for a reason other than deceit; the default is due to oversight or some mistake and it is not intentional. The second in which the nonpayment or short-payment, etc. of duty is ''by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty''; that is to say, it is intentional, deliberate and/or by deceitful means. Naturally, the cases falling in the two groups lead to different consequences and are dealt with differently.

Section 11A , however allow the assessees-in-default in both kinds of cases to make amends, subject of course to certain terms and conditions. The cases where the nonpayment or short-payment, etc. of duty is by reason of fraud, collusion, etc. are dealt with under sub-section (1A) of Section 11A and the cases where the non-payment or short-payment of duty is not intentional under sub-section (2B).

Sub-section (2B) of Section 11A provides that the assessee-in-default may, before the notice issued under sub-section (1) is served on him, make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and inform the Central Excise Officer in writing about the payment made by him and in that event he would not be given the demand notice under sub-section (1). But Explanation 2 to the sub-section makes it expressly clear that such payment would not be exempt from interest chargeable under Section 11AB, that is, for the period from the first date of the month succeeding the month in which the duty ought to have been paid till the date of payment of the duty.

What is stated in Explanation 2 to sub-section (2B) is reiterated in Section 11AB that states where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who has paid the duty under sub-section (2B) of Section 11A , shall, in addition to the duty, be liable to pay interest.....It is thus to be seen that unlike penalty that is attracted to the category of cases in which the non-payment or short-payment, etc. of duty is ''by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of the Act or of Rules made thereunder with intent to evade payment of duty'', under the scheme of the four Sections (11A , 11AA , 11AB and 11AC ) interest is leviable on delayed or deferred payment of duty for whatever reasons. The payment of differential duty by the assessee at the time of issuance of supplementary invoices to the customers demanding the balance of the revised prices clearly falls under the provision of sub-section (2B) of Section 11A of the Act.

The Bombay High Court, Aurangabad Bench, in its decision in CCE v. Rucha Engg. (P.) Ltd., that was relied upon by the Tribunal for dismissing the Revenue''s appeal took the view that there would be no application of section 11A(2B) or section 11AB where differential duty was paid by the assessee as soon as it came to learn about the upward revision of prices of goods sold earlier.

In Rucha Engg. the High Court observed as follows:

It is evident that Section 11 AB comes into play if the duty paid/levied is short. Both, the Commissioner (Appeals) and CESTAT have observed that the assessee paid the duty on its own accord immediately when the revised rates became known to them from their customers. The differential duty was due at that time i.e. when the revised rates applicable with retrospective effect were learnt by the assessee, which was much after the clearance of the goods and, therefore, question of payment of interest does not arise as the duty was paid as soon as it was learnt that it was payable. Finding that provisions of Section 11A(2) and 11A(2B) were not applicable as the situation occurred in the instant case was quite different, Section 11AB(1) was not at all applicable, and therefore, the assessee was not required to pay interest.''

It further held that a case of this nature would not fall in the category where duty of excise was not paid or short-paid.

We are unable to subscribe to the view taken by the High Court in Rucha Engg. It is to be noted that the assessee was able to demand from its customers the balance of the higher prices by virtue of retrospective revision of the prices. It, therefore, follows that at the time of sale the goods carried a higher value and those were cleared on short-payment of duty. The differential duty was paid only later when the assessee issued supplementary invoices to its customers demanding the balance amounts. Seen thus, it was clearly a case of short-payment of duty though indeed completely unintended and without any element of deceit, etc. The payment of differential duty thus clearly came under sub-section (2B) of Section 11A and attracted levy of interest under Section 11AB of the Act."

In SKF India Ltd., it has been, inter alia, held, as can be seen from the abovequoted paragraphs, that sub-section (2B) of Section 11A provides that the assessee in default may make payment of the unpaid duty on the basis of his own ascertainment or as ascertained by a Central Excise Officer and, in that event, such assessee in default would not be served with the demand notice under Section 11A(1) of the Act. However, Explanation 2 to the sub-section makes it clear that such payment would not be exempt from interest chargeable under Section 11AB of the Act. What is stated in Explanation 2 to sub-section (2B) is reiterated in Section 11AB of the Act, which deals with interest on delayed payment of duty.

From the scheme of Section 11A(2B) and Section 11AB of the Act, it becomes clear that interest is levied for loss of revenue on any count. In the present case, one fact remains undisputed, namely, accrual of price differential. What does differential price signify? It signifies that value, which is the function of the price, on the date of removal/clearance of the goods was not correct. That, it was understated. Therefore, the price indicated by the supplementary invoice is directly relatable to the value of the goods on the date of clearance, hence, enhanced duty. This enhanced duty is on the corrected value of the goods on the date of removal. When the differential duty is paid after the date of clearance, it indicates short-payment/short-levy on the date of removal, hence, interest which is for loss of revenue, becomes leviable under Section 11AB of the Act" (Emphasis Supplied)

In view of above decisions it appears that it has been held that whenever any application for classification of goods is pending before the respondent authority and if the goods are being removed in such cases also there is no presumption for provisional assessment. There is bound to be an application preferred by such manufacture also otherwise, he will be liable to pay the interest upon delayed payment of duty and the penalty. This aspect of the matter has been appreciated in paragraph Nos. 11, 12, 13, 14 of the aforesaid decisions. Thus, in the facts of the present case CESTAT, Kolkata cannot presume that earlier assessment was provisional in nature in absence of any application preferred by the respondent under Rule 7(1) of Rules, 2002.

In view of the aforesaid decisions it has been held by the Hon''ble Supreme Court that whenever there is a delayed payment of duty and there is no order for provisional assessment the assessee-manufacturer is liable to make payment of the interest upon delayed payment of the duty.

In view of aforesaid observations substantial questions of law have been answered accordingly that earlier assessment was never provisional in nature and it cannot be deemed to be provisional in nature as decided by the CESTAT, Kolkata, especially, in absence of any provision in the Central Excise Act, 1944. In the Rules 2002 there is bound to be an application for provisional assessment by the manufacturer under Rule 7(3) and there is bound to be an order passed by the Central Excise for provisional assessment which is not present in the facts of the present case.

So far as second substantial question of law is concerned the respondent is bound to make payment of interest under Rule 7(4) even if the earlier assessment is provisional in nature.

So far as 3rd question of law is concerned as stated hereinabove the differential duty has been paid at much later stage after removal of the goods and, therefore, the respondent is liable to make payment of interest as demanded under Section 11AB of the Central Excise Act, 1944. This Appeal is allowed and order passed by the CESTAT, Kolkata in Appeal No. ESM-391 of 2005 is hereby quashed and set-aside.