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2013 (9) TMI 313 - AT - Central ExciseShort Payment of Duty - Whether short-payment of duty for the month of March, 2008 would amount to default in payment of duty - Held that - The view taken by the Commissioner (Appeals) was correct view - Certainly non-payment in March, 2008 was a default in payment of appropriate duty for that month which attracted the provisions of Rule 8(3A) of the CER, 2002 - Consequently there was a bar on utilization of CENVAT credit for payment of duty on any excisable goods, whether final product or inputs as such, cleared from the factory in the subsequent quarter. GODREJ HERSHEY LTD. Versus COMMISSIONER OF C. EX., BHOPAL 2010 (11) TMI 263 - CESTAT, NEW DELHI - As far as term default is concerned, the same has not been defined either in the said Rules or in the Central Excise Act, 1944 - The term default had been defined in the Black s Law Dictionary 6th Edition to mean by its derivation, a failure - An omission of that which ought to be done. Specifically, the omission or failure to perform a legal or contractual duty . Apparently, therefore, any omission or failure to comply with the obligation relating to payment of duty in the manner prescribed and within the period specified under Rule 8(1) of the said Rules would amount to default in payment of duty - It may be a short payment of duty or it may be total failure to pay the duty. As per the decision in CCE, Chandigarh v. Ralson Carbon Black Ltd. 2008 (3) TMI 567 - CESTAT, NEW DELHI - The assessee was bound to pay equivalent amount of duty from PLA, with interest thereon under Section 11AB of the Central Excise Act - Upon such payment of duty with interest, the assessee will be entitled to recredit of the amount irregularly debited in CENVAT account at the time of clearance of inputs as such in May, 2008 Decided against Assessee.
Issues:
Recovery of excise duty, utilization of CENVAT credit, default in payment of duty, applicability of Rule 8(3A) of the Central Excise Rules, 2002, interpretation of "default in payment of duty," recredit of CENVAT credit. Analysis: 1. The appellant, engaged in the manufacture of medicaments, appealed against the recovery of excise duty amounting to Rs. 16,848 for the month of May 2008. The duty for March 2008 was not fully paid, with an arithmetical error of Rs. 7,000, which was rectified later. For the first quarter of 2008-09, duty was partially paid from PLA and CENVAT account. The issue revolved around the utilization of CENVAT credit for payment of duty and the subsequent penalties imposed. 2. Rule 8(3A) of the Central Excise Rules, 2002, states that default in duty payment beyond 30 days requires payment of excise duty without utilizing CENVAT credit. The Department issued a notice for recovery of duty, interest, and penalty due to delayed payment. The Commissioner (Appeals) initially dropped the demand for duty for May 2008 but later reviewed the decision, leading to an appeal by the assessee challenging the order. 3. The appellant cited various judgments to support their case, arguing against the applicability of Rule 8(3A) due to the timing of CENVAT credit utilization. The Department contended that the explanation added to Rule 8 post-amendment clarified that duty includes amounts payable under the CENVAT Credit Rules, 2004, supporting their demand for duty payment. 4. The dispute centered on whether the shortfall in duty payment for March 2008 constituted a default, as argued by the Department, or a short-payment, as contended by the appellant. The Tribunal referenced legal definitions of "default" to conclude that any failure to comply with duty payment obligations amounts to default, justifying the application of Rule 8(3A). 5. The Tribunal upheld the Commissioner's decision, emphasizing that the appellant's failure to pay the full duty in March 2008 constituted a default, restricting the utilization of CENVAT credit for subsequent clearances. The judgment mandated the payment of the equivalent duty amount from PLA, with interest, before recrediting the irregularly utilized CENVAT amount, in line with established legal precedents. 6. Ultimately, the Tribunal rejected the appeal, affirming the Commissioner's order to recover the duty amount from the appellant. The decision highlighted the importance of adhering to duty payment obligations and the consequences of default, underscoring the significance of timely and accurate duty payments to avoid penalties and ensure compliance with excise regulations.
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