2017 (3) TMI 860 - AT - Central Excise

Imposition of interest and penalty - delayed payment of tax - appellant claims that they were working under N/N. 8/2003 they were entitled to make payment of duty on monthly basis by 15th of the following month, no interest should be demanded - Held that - appellants were entitled to N/N. 8/03 dated 01.03.2003. However, they have not availed this exemption and opted for payment of full duty on goods which were eligible for SSI exemption - In terms of rule 8 second proviso, it is very clear that if the assessee is eligible for exemption and avail SSI exemption then only he is entitled for payment of duty by 5th of following month. In the present case, even though the appellant was entitled for SSI exemption they have not availed the exemption. Therefore this relaxation in the second provision to Rule 8(1) of CER, 2002 is not available to the appellant, they were supposed to pay duty by 5th of following month - the interest demanded is absolutely legal and correct, since the appellant has contravened the provisions of rule 8 by making delayed payment of duty - penalty of ₹ 5000 imposed by the lower authorities is in terms of Rule 27 of CER, 2002 - appeal dismissed - decided against appellant.

Summary

Issues:
- Delay in payment of excise duty
- Demand of interest and penalty under Section 11AC
- Applicability of SSI exemption notification
- Contravention of Rule 8 of Central Excise Rules
- Imposition of penalty

Analysis:
The case involved a situation where the appellant delayed payment of excise duty during April 2004 to July 2004, leading to a demand for interest and imposition of a penalty under Section 11AC. The appellant, claiming to be an SSI unit in a rural area, argued that they were entitled to the SSI exemption notification 8/03 dated 01.03.2003, allowing them to make monthly duty payments by the 15th of the following month. However, the revenue contended that since the appellant did not avail the SSI exemption during the relevant period, they were required to pay duty by the 5th of the following month, justifying the interest and penalty imposed.

The Tribunal noted that although the appellant was located in a rural area and cleared goods bearing another person's brand name, they did not avail the SSI exemption but paid full duty on goods eligible for the exemption. Referring to Rule 8 second proviso of the Central Excise Rules, the Tribunal emphasized that entitlement to payment by the 15th of the following month was contingent upon availing the SSI exemption. As the appellant did not avail the exemption, they were obligated to pay duty by the 5th of the following month. The Tribunal found the interest demanded and penalty imposed to be lawful, as the appellant had contravened Rule 8 by delaying duty payment, upholding the impugned order as just and legal.

Ultimately, the Tribunal dismissed the appeal, affirming the impugned order's decision. The judgment underscored the importance of complying with exemption notifications and relevant rules to determine duty payment timelines, highlighting the consequences of non-compliance through interest and penalties as per the Central Excise Rules.