2017 (6) TMI 1139 - AT - Central Excise

Short payment of tax - utilisation of CENVAT credit during the default period - sub rule(3A) of Rule 8(1) - Held that - The appellant for the default period i.e 1st may to 9th May, 2008. have not utilized any cenvat credit therefore proposal of the department for payment of duty in cash till the period 24-6-2008 does not hold good. In this fact, the demand of the duty in cash against utilization of the Cenvat credit for the period from 1st May, to 24 June, 2008 doe not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Dispute regarding duty liability for the month of March, 2008.
2. Utilization of Cenvat credit for payment of duty.
3. Validity of discount given by the appellant to customers.

Analysis:
1. The appellant failed to deposit the entire duty for March, 2008 by the due date, leading to a dispute over the duty liability amounting to ?8,28,116. The department claimed the shortfall was paid only by 24th June, 2008. The appellant argued that the actual liability was ?7,84,847 after deducting discounts given to customers, which was paid by 9th May, 2008. The appellate authority confirmed the department's proposal, leading to the appeal.

2. The appellant contended that even if Cenvat credit was utilized during the default period, it should be permissible based on a Gujarat High Court judgment. They cited cases where other courts and tribunals allowed such credit utilization during default periods. However, the Supreme Court had stayed the Gujarat High Court judgment, making it inapplicable in this case. The appellate authority found that the appellant had not utilized any Cenvat credit for the default period of 1st May to 9th May, 2008, and thus rejected the department's demand for cash payment till 24th June, 2008.

3. The dispute over the discount given by the appellant was resolved by acknowledging that the discount was declared in March itself, and credit notes issued later were merely a procedural formality. The assessable value should be determined after deducting the discount given in March. As the correct duty liability was determined to be ?7,84,847, which was paid by 9th May, 2008, the appellate authority found no justification for demanding cash payment against Cenvat credit utilization during the default period. Consequently, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment highlights the key legal issues involved, the arguments presented by both parties, and the reasoning behind the final decision delivered by the appellate authority.