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2022 (7) TMI 573 - AT - Central ExciseDemand of Interest - Clearance of certain inputs as such declaring lesser assessable value resulting in short payment of duty than the cenvat credit availed on the said inputs - Rule 3(5) of Cenvat Credit Rules, 2004 - extended period of limitation - HELD THAT - In the present case undisputedly the appellants have availed the CENVAT credit as was admissible to them on the inputs received by them. However, at the time of clearance of the said inputs as such, they have short paid the amounts required to be paid by them in terms of Rule 3(5) of the Cenvat Credit Rules, 2004. The appellants have short paid the amounts at the time of clearance of the goods. The case of short payment of the amounts at the time of clearance of goods is akin to the case of short payment of duty on the goods of own manufacture when cleared by the appellants. Such cases need to be handled accordingly. It has been held by the Hon ble Apex Court that in the case of short payment of duty at the time of clearance of the goods, the liability to pay interest on the same shall be absolute and there can be no denial of the same - Reference is made to the decision of the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS INTERNATIONAL AUTO LTD. 2010 (1) TMI 151 - SUPREME COURT where it was held that Explanation (2) to sub-section 2(B) of section 11A ibid states that payment by assesees in default by own ascertainment or as ascertained by C.E. officer not exempt from interest chargeable under section 11AB ibid. Interest leviable for loss of revenue on any count. Accrual of price differential duty when paid after clearance, it indicates short payment/ short levy on date of removal hence interest become leviable. Extended period of limitation - HELD THAT - The appellants were made aware in 2008 about the default in short payment of amount. However, they continued with the practice and have showed a willful intention to not act as per the provisions of Rule 3(5) of the Cenvat Credit Rules. In such situation, invocation of extended period is justified and needs to be upheld. The decision of CHANDRAPUR MAGNET WIRES (P) LTD. VERSUS COLLECTOR OF C. EXCISE, NAGPUR 1995 (12) TMI 72 - SUPREME COURT relied upon by the appellants is altogether in different context and has no applicability to the facts of the present case as in the said it was held that the claim for exemption of duty on the disputed goods cannot be denied on the plea that the assessee has taken credit of the duty paid on the inputs used in manufacture of these goods. In favour of assessee.
Issues Involved:
1. Demand of Central Excise duty short paid. 2. Appropriation of already paid amount against the confirmed demand. 3. Recovery of interest on short paid Central Excise duty. 4. Imposition of penalty under Section 11AC of the Central Excise Act, 1944. 5. Invocation of extended period for demand. Issue-wise Detailed Analysis: 1. Demand of Central Excise duty short paid: The appellants, manufacturers of excisable goods, cleared certain inputs declaring lesser assessable value, resulting in short payment of duty compared to the cenvat credit availed. As per Rule 3(5) of the Cenvat Credit Rules, 2004, the appellants were required to pay an amount equal to the credit availed on such inputs. The short payment was pointed out during an audit, and the appellants subsequently reversed the short-paid amount for the period 2006-07. However, they continued the same practice for subsequent years. The Additional Commissioner confirmed the demand of Rs. 25,82,527 under Section 11A of the Central Excise Act, 1944, which was upheld by the Commissioner (Appeals). 2. Appropriation of already paid amount against the confirmed demand: The amount of Rs. 25,82,527 already paid by the appellants was appropriated against the confirmed demand. This appropriation was not contested by the appellants, and it was a straightforward adjustment of the amount already reversed by them against the short payment identified. 3. Recovery of interest on short paid Central Excise duty: The appellants argued that since they had correctly availed the cenvat credit and always maintained a sufficient balance in their cenvat account, no interest was payable. However, the Tribunal held that the short payment of duty at the time of clearance of inputs necessitated the payment of interest. The Tribunal referred to the Supreme Court's decisions in International Auto Ltd. and Steel Authority of India Ltd., which established that interest is leviable on delayed or deferred payment of duty for whatever reasons, including short payment at the time of clearance of goods. 4. Imposition of penalty under Section 11AC of the Central Excise Act, 1944: The appellants contended that there was no suppression or intention to evade duty, and the short reversal of cenvat credit was unintentional. However, the Tribunal found that the appellants continued the practice of short payment even after being made aware of the default in 2008, indicating willful intent. The Tribunal upheld the imposition of a penalty equal to the duty demanded under Section 11AC, referencing the Supreme Court's decision in Rajasthan Spinning & Weaving Mills, which clarified that penalty under Section 11AC is for deliberate deception with the intent to evade duty. 5. Invocation of extended period for demand: The Tribunal noted that the appellants were made aware of their default in 2008 but continued the practice of short payment. This demonstrated a willful intention to not comply with Rule 3(5) of the Cenvat Credit Rules, justifying the invocation of the extended period for demand. The Tribunal upheld the use of the extended period, referencing the Supreme Court's decision in Rajasthan Spinning & Weaving Mills, which linked the conditions for extending the limitation period with the imposition of penalty under Section 11AC. Conclusion: The Tribunal dismissed the appeal, upholding the demand for short-paid duty, appropriation of the already paid amount, recovery of interest, imposition of penalty, and invocation of the extended period for demand. The Tribunal's decision was based on established legal principles and precedents, ensuring compliance with the Central Excise Act and Cenvat Credit Rules.
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