2015 (10) TMI 1829 - AT - Central Excise

Duty demand - CENVAT Credit - Demand of interest - Held that - Appellants were engaged in the manufacture of Meter Gauge classifiable under Chapter 73 & 84 of Central Excise Tariff Act, 1985. The appellants were discharging duty on monthly basis under Rule 8 of Central Excise Rules, 2002. There was a delay in discharging of duty on monthly basis. The appellant paid duty partly from CENVAT account during the defaulted period. By the impugned order, the Adjudicating Authority disallowed the utilization of the amount from CENVAT account during the period from 05.07.2010 to 29.09.2010 in terms of provisions of Rule 8(3A) of Central Excise Rules, 2002 and confirmed the demand of duty along with interest and penalty partly for not paying the amount by cash from PLA. - portion without utilizing the CENVAT Credit of sub-rule (3A) of Rule 8 of Central Excise Rules, 2002, shall be rendered invalid. - In view of the decision of Hon ble Gujarat High Court 2014 (12) TMI 585 - GUJARAT HIGH COURT , we find that the impugned order is not sustainable. The impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
- Disallowance of utilization of CENVAT account amount
- Validity of Rule 8(3A) of Central Excise Rules, 2002
- Liability to pay interest for non-payment of duty at the time of removal of goods

Analysis:

1. The Appellate Tribunal found that the appellants were involved in manufacturing Meter Gauge classifiable under Chapter 73 & 84 of the Central Excise Tariff Act, 1985. The appellants were discharging duty on a monthly basis under Rule 8 of the Central Excise Rules, 2002. However, there was a delay in discharging duty, and the appellant paid duty partially from the CENVAT account during the defaulted period. The Adjudicating Authority disallowed the utilization of the amount from the CENVAT account during a specific period and confirmed the demand of duty along with interest and penalty for not paying the amount by cash from PLA.

2. The Tribunal referred to a decision by the Hon'ble Gujarat High Court in the case of Indsur Global Ltd vs. Union of India, which declared a portion of sub-rule (3A) of Rule 8 of the Central Excise Rules, 2002, as unconstitutional. The High Court held that the condition for payment of duty without utilizing the CENVAT Credit until the outstanding amount is paid, including interest, is invalid. Based on this decision, the Tribunal concluded that the impugned order disallowing the utilization of the CENVAT account amount was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

3. The Tribunal addressed the issue of the liability to pay interest for non-payment of duty at the time of removal of goods. The Revenue representative argued that duty was not paid for each consignment at the time of goods removal, making the appellants liable to pay interest. The Tribunal ruled that the appellant should pay excise duty for each consignment at the time of removal of goods until the outstanding amount, including interest, is paid. The Revenue was granted the liberty to demand interest, if applicable, in accordance with the law.

In conclusion, the Appellate Tribunal's judgment primarily focused on the disallowance of utilizing the CENVAT account amount, the validity of Rule 8(3A) of the Central Excise Rules, 2002, and the liability to pay interest for non-payment of duty at the time of goods removal. The decision was based on the interpretation of relevant legal provisions and a precedent set by the Hon'ble Gujarat High Court.