2019 (11) TMI 376 - AT - Central Excise

Default in making payment within stipulated dates - bar on utilization of cENVAT credit - Department was of the view that the assessee having failed to make payment within the prescribed date has violated the provisions of Rule 8 (3A) of Central Excise Rules 2002 - HELD THAT - In the present case, there is no evidence to show that appellant deliberately defaulted the payment during the disputed period - The short payment due to any clerical or calculation mistake cannot be viewed as default under Rule 8 (3A) of CENVAT Credit Rules 2002. If not yet paid, the excess paid duty shall be adjusted to the short paid cess. The demand of duty, interest or penalties cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Short-payment of duty, violation of Rule 8 (3A) of Central Excise Rules 2002, demand of duty, interest, and penalties, adjustment of excess excise duty towards education cess, calculation error in duty payment.

Analysis:

1. Short-payment of duty and Rule 8 (3A) violation:
The appellants, manufacturers of general purpose machines, were found to have short-paid duty during a specific period, leading to a discrepancy between the duty payable and the amount actually paid. The department alleged a violation of Rule 8 (3A) of the Central Excise Rules 2002 and issued a show-cause notice demanding the short-paid duty and penalties. The original authority confirmed the demand and penalties after due process of law.

2. Appeal and arguments:
The appellant appealed against the decision, arguing that they had actually overpaid duty during the disputed period and provided a detailed calculation to support their claim. They contended that the excess duty paid could have been adjusted towards the short payment of education cess and higher education cess. The appellant cited a precedent to support their argument that a calculation error leading to short-payment does not constitute a deliberate default under Rule 8 (3A).

3. Department's stance:
The department, represented by the A.R., maintained that the appellant had failed to pay duty within the prescribed date, constituting a default under Rule 8 (3A). They argued against the adjustment of excess excise duty towards education cess, stating that such an adjustment was not provided for in the rules.

4. Tribunal's decision:
After hearing both sides and examining the calculations presented, the Tribunal found that the appellant had indeed overpaid duty during the relevant period. The discrepancy in payment was attributed to a calculation error regarding education cess and higher education cess. The Tribunal noted that if the appellant had been aware of the excess payment, they would have adjusted it towards the cess payments. Citing a precedent, the Tribunal held that a short payment due to a clerical or calculation mistake does not amount to a default under Rule 8 (3A). Therefore, the demand for duty, interest, and penalties was deemed unsustainable. The Tribunal allowed the appeal, setting aside the impugned order and granting consequential reliefs.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the excess duty paid should be adjusted towards the short-paid cess amounts. The decision underscored that inadvertent errors in payment, without evidence of deliberate default, do not warrant the imposition of penalties under Rule 8 (3A) of the Central Excise Rules 2002.