Retreat from Assault hex 14.3 vs. 12.12

[cjsiam]

picture a hex
Germans are dug in
they have an MG
It's Demoralized.....there is a german officer, also demoralized....

There is Soviet SMG unit in the hex
It is also Demoralized....

The Soviet rolls for Recovery....
Fails and must flee....

In circumstances where the Germans were NOT demoralized---
they would get a free shot....

But--- 14.3 says demoralized units may not fire/or attack---except
to defend in an Assault....
12.12 indicates the units "May be assaulted by the enemy units in the Assault hex"....
Thus 14.3 prevents the Dem unit from conducting such....

Is that a correct interpretation?