N. Kumar, J.The assessee has preferred this appeal challenging the order passed by the Tribunal upholding the levy of interest on the assessee.

2. The assessee are the manufacturers of parts of motor vehicles such as Front Axle, Read Axle, Propeller Shaft, Stiffener etc. These goods are cleared on payment of appropriate central excise duties. The major buyer of these goods is M/s. Toyota Kirloskar Motors Private Limited, Bidadi, Bangalore. The assessee and the purchaser are interconnected undertakings and have business interests with one another in the context of Section 4(1)(b) of the Central Excise Act, 1944. The assessee requested the Assistant/Deputy Commissioner of Central Excise, Large Taxpayers Unit, Bangalore for assessment of goods manufactured and cleared by them to M/s. Toyota Kirloskar Motors Private Limited, Bidadi, Bangalore provisionally for the financial year 2007-08. Accordingly, the order dated 24-4-2007 came to be passed in terms of Rule 7 of the Central Excise Rules, 2002 and subject to execution of bond of Rs. 50 lakhs with bank guarantee for Rs. 12.5 lakhs. Bands were executed and the bank guarantee was furnished. Thereafter, on 25-9-2008, the assessee requested for finalization of the subject provisional assessment. After considering the entire material made available, the Assessing Authority passed the final order which reads as under :-

1. The assessment in respect of the subject goods is hereby ordered to be finalized for the year 2007-08, adopting the assessable value deter-mined under the cost construction method based on CAS-4 guidelines and the cost certificate issued by the Cost Accountant.

2. In respect of certain items, the provisional value adopted by the assessee is less than the final value arrived based on the Cost Accountant certificate which has resulted in short payment of duty of Rs. 10,63,417/- including Education Cess and Secondary & Higher Education Cess and the same is demanded in terms of Rule 7 of the Central Excise Rules, 2002.

3. The amount of Rs. 10,63,417/- including Education Cess and Secondary & Higher Education Cess paid by the assessee vide Invoice No. 2733 dated 25-9-2008 is appropriated.

4. I demand payment of interest amounting to Rs. 1,34,634/- (Rupees One lakh thirty four thousand and six hundred and thirty four only) in terms of sub-rule (4) of Rule 7 of the Central Excise Rules, 2002.

5. In respect of certain items, the provisional value adopted by the assessee is more than the final value arrived based on the Cost Accountant certificate which has resulted in excess payment of duty of Rs. 1,77,20,157/-including Education Cess and Secondary & Higher Education Cess and the same is confirmed. However, the assessee in his letter dated 25-9-2008 has undertaken not to claim any refund of duty paid which is refundable by the department for the financial year 2007-08 since the same has already been passed on to M/s. Toyota Kirloskar Motor and the same has been taken into account."

3. The assessee contended that if the total duty paid provisionally is taken into consideration, there was no short payment of duty at all. On the contrary, they had paid the excise duty in excess of Rs. 1,66,56,740/- and therefore, the question of payment of interest on the ground of short payment of duty in respect of certain items would not arise. However, the said contention was not accepted as it is clear from the adjudicating order. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Appeals who upheld the order. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal, which also dismissed the same. Therefore, the assessee is before this court.

4. Heard the learned Counsels for the parties.

5. The substantial question of law which arises for consideration in this appeal is whether the Tribunal was right in confirming the demand of interest under Rule 7(4) of the Central Excise Rules, 2002 without harmoniously reading the provisions of Rule 7(5) of the Central Excise Rules, 2002

6. Rule 7 reads as under :-

Rule 7. Provisional assessment. - (1) Where 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 reasons for payment of duty on provisional basis and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, may order allowing payment of duty on provisional basis at such rate or on such value as may be specified by him.

(2) The payment of duty on provisional basis may be allowed, if the assessee executes a bond in the form prescribed by notification by the Board with such surety or security in such amount as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, deem fit, binding the assessee for payment of difference between the amount of duty as may be finally assessed and the amount of duty provisionally assessed.

(3) The Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall pass order for final assessment, as soon as may be, after the relevant information, as may be required for finalizing the assessment, is available, but within a period not exceeding six months from the date of the communication of the order issued under sub-rule (1):

Provided that the period specified in this sub-rule may, on sufficient cause being shown and the reasons to be recorded in writing, be extended by the Commissioner of Central Excise for a further period not exceeding six months and by the Chief Commissioner of Central Excise for such further period as he may deem fit.

(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 u/s 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.

(5) Where the assessee is entitled to a refund consequent to order for final assessment under sub-rule (3), subject to sub-rule (6), there shall be paid an interest on such refund at the rate specified by the Central Government by notification issued u/s 11BB of the Act from the first day of the month succeeding the month for which such refund is determined, till the date of refund.

(6) Any amount of refund determined under sub-rule (3) shall be credited to the Fund :

Provided that the amount of refund, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to -

(a) the duty of excise paid by the manufacture, if he had not passed on the incidence of such duty to any other person; or

(b) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person."

7. A perusal of the aforesaid provision makes it clear that, where the assessee is unable to determine the value of excisable goods or determine the rate of duty applicable thereto, he may request the competent authority as provided in the said provision, to permit him to pay the duty on provisional basis at such rate or on such value as may be specified by him. If the authority is satisfied, he may pass an order permitting such payment and taking all necessary steps for payment of any short fall in the duty payable at the end of assessment. Thereafter, a final assessment order is to be passed. If after the final assessment, if it is found that there is a short fall in payment of duty, sub-rule (4) provides for payment of interest on such short payment of duty. Whereas sub-rule (5) provides for refund of excess duty paid.

8. Therefore, it is clear that after a final assessment order is passed, if the duty paid in terms of provisional assessment is less than the duty payable after the final assessment, the assessee is liable to pay the interest on the short fall. In the entire scheme of Rule 7, there is no indication that when an assessee is permitted to pay duty in pursuance of a provisional assessment order, if he is dealing with more than one goods, they have to be treated separately. Even though the duty payable under the Act is to be calculated under each head of each case ultimately it is the total duty payable for all the goods which are the subject matter of the provisional assessment and final assessment which is to be taken into consideration. If after taking into consideration the duty payable in respect of all the goods and the duty paid in pursuance of the final assessment order, if still the assessee is due in any duty, men for the short fall in payment of duty, the assessee is liable to pay interest.

9. In the instant case, admittedly for certain items the Adjudicating Authority has held the short fall in payment of duty after the final assessment order as Rs. 10,63,417/-. In respect of other items, the assessee has paid Rs. 1,77,20,157/- in excess. But before imposing interest, the authority should have deducted the short fall in the excess payment made. If there is no short fall in payment of duty, payment of interest does not arise. They have treated the duty payable under two categories. It was found in respect of some items the duty payable after the final order is more than what was paid under provisional assessment. The approach of the authorities in this regard is erroneous, unwarranted and unsupported by any statutory provision. If we keep in mind the principle underlying the provisions, it is only when the duty is due and it is not paid within the stipulated time and the duty is paid thereafter, in order to compensate the revenue, interest is imposed. If that is to be kept in mind, in the instant case, when the assessee has paid a sum of Rs. 1,66,56,740/- excess duty which is entitled to claim refund, he cannot be taxed with payment of excess duty in the form of interest. The entire approach of the department is unreasonable, contrary to the scheme of the Act and negatives the principle underlying these provisions. Therefore, all the authorities were in error in levying and upholding the levy of interest. In that view of the matter, we pass the following :

10. The Appeal is allowed. The impugned order passed by all the authorities are hereby set aside. The substantial question of law framed in this appeal is answered in favour of the assessee and against the revenue. No costs.