2013 (11) TMI 1023 - AT - Central Excise

Determination of duty u/s 11A (2) before demanding interest assessee contended that what is being demanded is CENVAT credit and the same has been treated as duty, since Section 11A has been mentioned in Rule 14 and therefore there should have been determination of duty in this case. - Held that - Section 11A (2B) is an exception to the procedure prescribed in Section 11A - It caters to a situation where an assessee makes a voluntary payment and there is no suppression or fraud or mis-declaration or collusion, etc. The Section itself provides for recovery of the entire amount and it also provides that subsection 2B would not apply where there is fraud, suppression, mis-declaration, etc. when Section 11A has been made applicable for recovery/payment of credit wrongly taken or utilized, it would be unfair to an assessee to make a claim that when the credit is treated as duty, determination under section 11A (2) is a must - short payment would include nonpayment or short payment of interest also - the procedure adopted by the Revenue to demand only interest cannot be found fault with - Once section 11A (2B) provisions are applicable to a particular situation, the provisions of Sections 11A (1A), (2) and (2A) would not apply. The circumstances covered in Section 11A (2B) refers to duty of excise not being levied or short-paid on the final products is really surprising - Rule 14 clearly provides that for the purpose of recovery of wrongly utilized credit or wrongly taken credit, provisions of Section 11A and 11AB would apply mutatis mutandis - This does not mean that when Section 11A (2B) is invoked, it becomes duty and not the wrongly utilized CENVAT credit - the appellant has failed to make out any case whatsoever for setting aside the order demanding interest from the - Decided against Assessee.

Summary

Issues Involved:
1. Legality of transferring Education Cess and SHE Cess to BED credit account.
2. Determination of duty under Section 11A(2) of the Central Excise Act, 1944.
3. Applicability of interest and penalty under Rule 14 of CENVAT Credit Rules, 2004.
4. Validity of the department's acceptance of duty payment from Education Cess account.

Detailed Analysis:

1. Legality of Transferring Education Cess and SHE Cess to BED Credit Account:
The appellant transferred Rs. 22 lakh from the Education Cess account and Rs. 3 lakh from the SHE Cess account to the BED credit account in January 2008. The tribunal found this transfer to be contrary to Rule 3(7)(b) of the CENVAT Credit Rules, 2004, which states that CENVAT credit in respect of various duties and cesses can be utilized only for payment of the same duty or cess. The tribunal emphasized that there is no provision under the rules allowing such a transfer and utilization.

2. Determination of Duty under Section 11A(2) of the Central Excise Act, 1944:
The appellant argued that the demand for interest and penalty is unsustainable without the determination of duty under Section 11A(2). The tribunal clarified that Section 11A(2B) allows for voluntary payment of duty by the assessee and that interest under Section 11AB is payable on the amount paid by the person. The tribunal concluded that the absence of a formal determination under Section 11A(2) does not invalidate the demand for interest.

3. Applicability of Interest and Penalty under Rule 14 of CENVAT Credit Rules, 2004:
The tribunal noted that Rule 14 of the CENVAT Credit Rules, 2004, mandates recovery of wrongly utilized credit along with interest. The tribunal referenced the Hon'ble Supreme Court decision in the case of M/s. Ind-Swift Laboratories Ltd., which held that interest is payable even if the credit is taken but not utilized. Since the appellant had both taken and utilized the credit, the tribunal found the demand for interest and imposition of a penalty of Rs. 5,000/- to be justified.

4. Validity of the Department's Acceptance of Duty Payment from Education Cess Account:
The appellant claimed that the department's non-action on the duty paid from the Education Cess account implied acceptance. The tribunal rejected this argument, explaining that under the self-assessment system, there is no formal acceptance of payment by the department. The tribunal emphasized that the absence of a show-cause notice does not imply acceptance of the payment method used by the appellant.

Conclusion:
The tribunal rejected the appeal, upholding the demand for interest and the imposition of a penalty. The tribunal found the appellant's arguments to be without merit and confirmed that the provisions of the law had been correctly applied by the department. The appeal was dismissed, and the order demanding interest and imposing a penalty was sustained.