2014 (11) TMI 328 - AT - Central Excise

Levy of interest on removal of goods as such - demand of interest under Section 11AB of the Central Excise Act, 1944 from the date of actual clearance and the date of reversal of the credit - Held that - Expression on the date of such removal is referable to the rate applicable to such goods and it cannot be understood to mean that the duty should be paid at the time of removal in terms of substituted provisions. The expression on the date of such removal stands deleted in the new sub-rule (4) to Rule 3 of CENVAT Credit Rules, 2002 - assessee has paid the duty at the end of the month i.e. much prior to the 5th day of the following month or in case where the removal had taken place in March before 31st March of the relevant year. In such circumstances, it cannot be said that the there has been delay in payment of duty so as to invoke Section 11AB of the Central Excise Act, 1944. Even though the Tribunal has proceeded on the basis that the deposit was made prior to the issuance of show cause notice, on facts, we found, such a contention is not tenable - No reason to interfere with order passed - Decided against Revenue.

Summary

Issues:
- Interpretation of Section 11AB of the Central Excise Act, 1944 regarding the payment of interest for belated duty payment.
- Applicability of Rule 8 of the Central Excise Rules, 2002 in the context of clearance of inputs and capital goods.
- Comparison of judgments by different authorities regarding the interpretation of relevant rules.

Analysis:
1. Interpretation of Section 11AB: The main issue in this case revolved around the interpretation of Section 11AB of the Central Excise Act, 1944, which deals with the payment of interest for belated duty payment. The Revenue contended that interest should be levied from the date of clearance if any duty was not paid or short-paid. However, the Commissioner (Appeals) set aside the adjudication order based on the interpretation of the relevant provisions.

2. Applicability of Rule 8: The case also delved into the applicability of Rule 8 of the Central Excise Rules, 2002 in the context of clearance of inputs and capital goods. The appellants had cleared CENVAT availed inputs and capital goods 'as such' under the cover of prescribed invoices, debiting the amounts in their accounts as per Rule 8. The Commissioner (Appeals) analyzed whether the facility of payment of duty under Rule 8 was available for such clearances and found in favor of the appellants based on the interpretation of the rules.

3. Comparison of Judgments: The judgment referenced previous decisions by different authorities to support the interpretation of the rules. It cited the case of KLRF Textiles Vs. Commissioner of C.Ex. Tirunelveli and Commissioner of C.Ex. Raigad Vs. M/s. Pidilite Industries Ltd. to establish that the facility of payment of duty under Rule 8 extends to inputs and capital goods removed as such from the factory of production. Additionally, the judgment referred to a decision by the Hon'ble Madras High Court in the case of CCE, Chennai Vs. SS Lumax Ltd., where the court rejected the Revenue's appeal based on similar grounds, further supporting the interpretation of the rules in favor of the appellants.

In conclusion, the judgment upheld the Commissioner (Appeals)' decision based on a comprehensive analysis of the relevant provisions and previous judicial interpretations. It clarified the application of Rule 8 in the context of clearance of inputs and capital goods and emphasized that the duty payment was made within the stipulated timeframes, thereby rejecting the appeals filed by the Revenue.