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2013 (4) TMI 534 - HC - Central ExciseDefault in payment of Central excise duty - period from December 2010 to May 2011 - show cause notice requiring the payment of excise duty on each consignment in cash, without utilizing Cenvat Credit until payment of outstanding amount together with interest - Held that - As under Sub-Rule (1) of Rule 8 of Central Excise Rules, 2002 if an assessee, failed to pay the duty within the time stipulated i.e. on the 6th day of following month if it is paid electronically through internet banking or on the 5th day of following month in any other case, and a further period of 30 days under Sub-Rule (3A) is disentitled to make use of the Cenvat Credit. In the admitted facts, petitioner defaulted in the payment of duty for the months of December 2010 to May 2011, but did so with interest on 21.5.2011 in a sum of ₹ 20,45,600/- towards duty and ₹ 84,324/- towards interest and also payment of ₹ 10,45,749/- towards duty by utilizing the Cenvat Credit, without disclosing the particulars against which it was paid nor the date of payment. Hence, it is not possible for this Court, at this stage to accept the plea of the petitioner. The order impugned does not suffer from serious infirmities occasioning grave injustice to the petitioner calling for interference in exercise of extraordinary writ jurisdiction under Article 226 of the Constitution of India.
Issues:
Violation of Central Excise Rules regarding payment of duty and utilization of Cenvat Credit. Detailed Analysis: Issue 1: Violation of Central Excise Rules The petitioner, holding a Central Excise Registration Certificate, was accused of defaulting in payment of Central excise duty from December 2010 to May 2011. The show cause notice alleged that the petitioner failed to pay the duty on time for various months, violating Rule 8 and sub-Rule (3A) of the Central Excise Rules, 2002. The petitioner utilized Cenvat Credit instead of paying the duty in cash, leading to the demand for recovery under Section 11A of the Central Excise Act, 1944, along with interest and penalty. The petitioner argued that the prohibition on utilizing Cenvat Credit was only for arrears, not the entire credit, and cited a relevant decision. The Additional Commissioner held that the petitioner wrongly used the Cenvat Credit and directed to demand the outstanding amount in cash, along with interest and penalty. Issue 2: Appeal and Pre-deposit Requirement The petitioner appealed the decision before the Commissioner of Central Excise (Appeals-I) seeking a stay or waiver of pre-deposit. The Appellate Authority directed the petitioner to make a pre-deposit of the disputed amount failing which the appeal would be dismissed. The petitioner contended that the pre-deposit would result in double payment as the duty and interest had already been paid for the relevant period. The petitioner also cited financial constraints as the reason for requesting a waiver of the pre-deposit. Issue 3: Legal Interpretation of Central Excise Rules The counsel for the petitioner argued that the duty and interest for the months in question were paid, and the Appellate Authority erred in directing a pre-deposit. On the other hand, the revenue's counsel asserted that as per Rule 8(3A) of the Central Excise Rules, default in duty payment disentitles the assessee from utilizing Cenvat Credit until the outstanding amount is paid, including interest. The Appellate Authority's decision to direct the pre-deposit was justified under Section 35F of the Central Excise Act, 1944. Conclusion: The Court found that the petitioner had defaulted in duty payment for the specified months and utilized Cenvat Credit without disclosing details of the payments. The plea of the petitioner was not accepted, and the order impugned was upheld. The Court rejected the petition, stating that the order did not cause grave injustice to the petitioner. The petitioner was directed to comply with the order by a specified date.
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