2014 (9) TMI 190 - HC - Central Excise

Waiver of pre-deposit - Restriction of utilizing cenvat credit for default in making payment of duty of excise - recovery of duty with interest and penalty - defaulted payment was beyond a period of 30 days - Held that - assessee has lost before the Commissioner (Appeals) during the first period from August, 2008 to March, 2009 and for the subsequent periods, the Commissioner (Appeals), taking note of the offer made by the assessee, was inclined to order pre-deposit of 50% of the duty confirmed. The learned Single Judge also confirmed the order of pre-deposit vide order 2013 (3) TMI 482 - MADRAS HIGH COURT . The order passed by the Commissioner (Appeals) in Order-in-Appeal No.62/2013(M-IV), dated 20.2.2013, in respect of the first period is in favour of the Revenue. Therefore, balancing the interest of the Revenue and that of the assessee and taking note of the offer made by the assessee, interim order was passed by the Commissioner (Appeals) for the subsequent periods and the Tribunal also passed similar orders. We do not find any error in such exercise of discretion by the Tribunal. At this juncture, the learned counsel for the appellant pleaded that as a last chance one month s time may be granted for payment of the pre-deposit amount, as directed by the Tribunal. - time allowed - appeal restored before tribunal.

Summary

Issues Involved:

1. Compliance with Rule 8(3A) of the Central Excise Rules, 2002.
2. Legality of demand for duty beyond the date of payment of defaulted duty.
3. Justification for pre-deposit orders by the Tribunal.
4. Consistency in Tribunal's orders for similar cases.
5. Dismissal of appeals for non-compliance with pre-deposit orders.

Issue-wise Detailed Analysis:

1. Compliance with Rule 8(3A) of the Central Excise Rules, 2002:

The appellant, engaged in the manufacture of Sheet Metal Pressed Automobile Components, defaulted on duty payments beyond 30 days from the due date on several occasions. According to Rule 8(3A), the appellant was required to pay excise duty for each consignment at the time of removal without utilizing the CENVAT credit until the outstanding amount, including interest, was paid. The department issued show cause notices and demanded duty, interest, and penalties for the periods from May 2010 to December 2010 and January 2011 to October 2011. The original authority confirmed these demands, and the Commissioner (Appeals) upheld this decision, emphasizing that the duty liability discharged through CENVAT credit was not valid under Rule 8(3A).

2. Legality of Demand for Duty Beyond the Date of Payment of Defaulted Duty:

The appellant argued that the demand for duty beyond the date on which the defaulted duty was paid along with interest was incorrect. However, the Commissioner (Appeals) and the Tribunal found that the appellant had defaulted in duty payment beyond 30 days and continued to clear goods using CENVAT credit instead of cash/PLA, which was against Rule 8(3A). Hence, the demand for duty, interest, and penalties was upheld.

3. Justification for Pre-deposit Orders by the Tribunal:

The Tribunal directed the appellant to make a pre-deposit of 50% of the duty confirmed (Rs. 45,65,700) within six weeks. The appellant contended that they had already paid the defaulted duty and interest and that the duty demanded in cash during the default period was significantly lower. Nevertheless, the Tribunal justified the pre-deposit order based on the merits of the case and previous orders, including the High Court's order upholding the pre-deposit condition.

4. Consistency in Tribunal's Orders for Similar Cases:

The appellant highlighted inconsistencies in the Tribunal's orders, noting that in a similar earlier appeal, the Tribunal had directed only the payment of interest without any pre-deposit. However, the Tribunal and the Commissioner (Appeals) justified their decisions based on the specific facts and circumstances of each case, the appellant's offers, and the need to balance the interests of revenue and the appellant.

5. Dismissal of Appeals for Non-compliance with Pre-deposit Orders:

The Tribunal dismissed the appeals for non-compliance with the pre-deposit orders. The appellant requested additional time to comply with the pre-deposit condition and a remand to the Commissioner (Appeals) for a fresh consideration on merits. The High Court permitted the appellant to make the pre-deposit within one month and remitted the matter to the Commissioner (Appeals) for a fresh hearing on merits, emphasizing the need to expedite the resolution of the matter.

Conclusion:

The High Court disposed of the appeals, allowing the appellant one month to comply with the pre-deposit order and remitting the matter to the Commissioner (Appeals) for a fresh hearing on merits. The Court found no substantial question of law involved and aimed to expedite the litigation process. Consequently, the connected miscellaneous petitions were closed.