2015 (9) TMI 1492 - AT - Central Excise

Forfeiture of the facility to pay duty on monthly basis under Rule 8 (3A) - Held that - The original order states that the respondent was liable to pay a Central excise duty of ₹ 1,53,14,168/- but had paid the duty of ₹ 1,22,52,128/-. There is no clarity as to whether the nonpayment of duty is after the correct self assessment made under Rule 6 by the assessee or is there a short payment of correct duty not assessed by the assessee. The Ld. Commissioner in his appellate order states that lower authority is well within his rights to forfeit the facility even if the assessment has been done incorrectly and there is short payment of duty on that count. We find such conclusion is without support of the legal provisions. If there is an incorrect assessment resulting in short payment of duty the correct course of action is to demand such short payment in terms of Section 11 A. Such short payment due to incorrect assessment cannot automatically result in action under Rule 8 (3A). Though the respondent admitted that clerical error resulted in their short payment it is not clear whether duty liability and payment were reflected in the assessment documents - appeal dismissed.

Issues:
1. Appeal against the order of Ld. Commissioner (A) dated 05.04.2006 regarding forfeiture of facility to pay duty under Rule 8 (3A).
2. Interpretation of Rule 8(3A) of Central Excise Rules 2002.
3. Correctness of original authority's order in terms of Rule 8 (3A).
4. Procedural fairness in withdrawing the facility under Rule 8(1) without notice or hearing.
5. Application of Section 11A for demand in case of short payment of duty.
6. Assessment of duty liability and payment discrepancies.

Analysis:
1. The appeal was filed by the Revenue against the order of Ld. Commissioner (A) dated 05.04.2006, which directed the forfeiture of the facility to pay duty under Rule 8 (3A) due to non-payment of Central Excise duty and educational cess by the respondent. The Ld. Commissioner (A) set aside the order citing lack of notice and hearing for the respondent, leading to the Revenue's appeal before the tribunal.

2. The tribunal analyzed Rule 8(3A) of the Central Excise Rules 2002, which specifies the consequences of default in duty payment. The rule mandates forfeiture of the facility to pay duty in monthly installments if duty payment is delayed beyond thirty days from the prescribed date. The tribunal scrutinized the application of this rule in the case at hand.

3. The respondent filed a cross objection challenging the correctness of the original authority's order concerning Rule 8(3A). They argued that the department should have initiated demand proceedings under Section 11A of the Central Excise Act 1944 instead of resorting to Rule 8 without notice or hearing. The tribunal considered these contentions in its analysis.

4. The procedural fairness of withdrawing the facility under Rule 8(1) without prior notice or hearing was a crucial aspect of the case. The Ld. Commissioner (A) was criticized for setting aside the order based on procedural grounds, even though the original authority's decision was deemed correct on merits. The tribunal evaluated the necessity of following due process in such matters.

5. The tribunal delved into the application of Section 11A, which deals with the recovery of duty in cases of short payment. It was highlighted that the correct procedure in case of incorrect assessment leading to duty short payment is to issue a demand notice under Section 11A, rather than invoking Rule 8(3A) directly.

6. Lastly, the tribunal examined the assessment documents and discrepancies in duty liability and payment. It was noted that the nature of the duty assessment, whether correct self-assessment by the assessee or short payment due to clerical errors, was crucial in determining the appropriate course of action. The tribunal ultimately upheld the Ld. Commissioner (A)'s decision to set aside the original order, dismissing the Revenue's appeal and disposing of the cross objection filed by the respondent.

← Previous Next →