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2016 (3) TMI 160 - AT - Central ExciseLiability to pay duty defaulted from the current account/in cash - the duty has already been paid through CENVAT credit account - Whether the interest is liable to be demanded from the appellant as the amount of duty on consignment basis has been paid without any delay by utilising the CENVAT credit and penalty can be imposed ? - Held that - In the present case, since both the authorities below have admitted that the duty has been paid by the appellant on clearance of each consignment by utilising the CENVAT credit, in my opinion, such payment is in conformity with sub-rule (3A) of Rule 8 and thus, order for recovery of the duty already paid by utilising the CENVAT credit is not proper and justified, in view of the judgement of Hon ble Gujarat High Court in the case of Indsur Global Ltd. Vs. Union of India (2014 (12) TMI 585 - GUJARAT HIGH COURT ). Since the central excise duty for the above period was paid by the appellant along with interest, it is of the view that confirmation of interest liability again on the appellant is also not in conformity with the Cenvat statute. It is an admitted fact on record that there was no intention on the part of the appellant to evade the payment of duty. Non-payment of central excise duty within the due date was due to the constraint in arrangement of funds, which cannot be attributable to fraud, collusion, wilful mis-statement, etc. Therefore, in view of the judgement of Hon ble Gujarat High Court in the case of CC Vs. Saurashtra Cement Ltd. 2010 (9) TMI 422 - GUJARAT HIGH COURT , imposition of penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1994 is not justified. - Decided in favour of assessee
Issues involved:
1. Liability to pay duty already paid through CENVAT credit account. 2. Liability for interest on duty paid on consignment basis without delay. 3. Imposition of penalty under the circumstances. Analysis: Issue 1: Liability to pay duty already paid through CENVAT credit account The case involved the appellant defaulting in duty payment for certain months, subsequently paying the duty from their CENVAT credit account. However, a Show Cause Notice was issued seeking recovery of the duty amount, alleging non-payment on consignment goods without utilizing CENVAT credit. The Tribunal analyzed Rule 8(3A) of the Central Excise Rules, 2002, which restricts CENVAT credit utilization if duty payment is delayed beyond 30 days. The Tribunal referred to a judgment by the Gujarat High Court, declaring the relevant portion of the rule as ultra vires and unconstitutional. As the duty was paid using CENVAT credit within the stipulated time, the Tribunal held that the recovery of duty already paid through CENVAT credit was unjustified. Issue 2: Liability for interest on duty paid on consignment basis without delay The Tribunal addressed the issue of whether interest could be demanded when duty on consignment goods was paid promptly using CENVAT credit. It was noted that the duty for the relevant periods was paid along with interest. Referring to the Gujarat High Court judgment, the Tribunal concluded that the confirmation of interest liability on the appellant was not in line with the Cenvat statute, given the timely payment of duty using CENVAT credit. Issue 3: Imposition of penalty under the circumstances The Tribunal considered the imposition of a penalty under Rule 25 of the Central Excise Rules, 2002, in light of the appellant's failure to pay duty on time due to fund constraints, without any intent to evade payment. Citing a judgment by the Gujarat High Court, the Tribunal held that penalties should not be imposed in cases where non-payment is not due to fraud or willful misstatement. Consequently, the Tribunal found the penalty imposition unjustified in this case. In conclusion, the Tribunal allowed the appeal, stating that the recovery of duty already paid through CENVAT credit, the confirmation of interest liability, and the imposition of penalty were not justified based on the circumstances and legal precedents cited in the judgment.
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