2009 (11) TMI 73 - HC - Central Excise

Failure in monthly payment of duty Rule 8(3A) of Central Excise Rules, 2002 forfeiture of payment of duty through cenvat credit held that - we are of the view that if the appellant (commissioiner of central excise) has preferred to pass one consolidated order in respect of five show cause notices then the provisions of sub rule 3 A of Rule 8 of the rules are attracted which make it clear that two months period would run either from the date of order or from the date of payment. The amounts due having been paid just after 30 days and within two months for each respective instance, then the forfeiture of the facility to pay dues in monthly instalments would be for a period of two months from the date of passing of communication of the order. The order for each instance being a common order, the period of two months would in the facts and circumstances of this case necessarily run concurrently.

Summary

Issues:
Interpretation of Rule 8 of the Central Excise Rules, 2002 regarding the forfeiture period for default in payment of excise duty.

Analysis:
The appeal in this case was filed under Section 35 G of the Central Excise Act, 1944 against an order passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi. The main question of law raised was whether the forfeiture period of two months under sub rule 3A of Rule 8 of the Central Excise Rules, 2002 for each instance of default should run concurrently or continuously. The dealer-respondent had defaulted in discharging monthly excise duty liabilities on multiple occasions. The dispute arose as to whether the penalty period of two months for each instance should run concurrently or continuously.

The rule in question, sub rule 3A of Rule 8 of the Central Excise Rules, 2002, states that the penalty period shall be two months from the date of payment of the entire due along with interest or from the date of communication of the order, whichever is later. The Commissioner (Appeals) had reduced the penalty period to two months for each instance by invoking the latter half of the provisions of sub rule 3A of Rule 8, a decision upheld by the Tribunal.

The High Court, after hearing the arguments, held that if the appellant had chosen to pass a consolidated order for multiple show cause notices, then the provisions of sub rule 3A of Rule 8 would apply. In this case, since the amounts due were paid within two months for each instance, the forfeiture of the facility to pay dues in monthly installments would be for a period of two months from the date of passing of the communication of the order. As the order for each instance was a common order, the period of two months would necessarily run concurrently in the circumstances of this case. The Court concluded that no substantive question of law arose for determination, and therefore, the appeal was dismissed.

In conclusion, the judgment clarifies the application of Rule 8 of the Central Excise Rules, 2002 in cases of default in payment of excise duty, specifically addressing the forfeiture period for such defaults and whether it should run concurrently or continuously based on the specific circumstances of the case.