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2013 (4) TMI 245 - AT - Central ExciseShort payment of duty due to wrong availment of Excess Cenvat Credit - Payment of duty in Cash - whether the Rule 8(3A) is applicable only for the non-payment of the total duty - held that - It is true that word default is not found in sub-rule (1). However, merely because the said word is not found in sub-rule (1) that cannot be a justification to arrive at a conclusion that the provisions of sub-rule (3A) would not be attracted in spite of non-compliance of sub-rule (1). - It is also pertinent to note that there is no expression short payment or less payment used in sub-rule (1) and rightly so because question of considering whether there is short payment or less payment can arise only after there is default in complying with the obligation prescribed under sub-rule (1). Following the decision in Godrej Hershey Ltd. v. Commissioner of Central Excise 2010 (11) TMI 263 - CESTAT, NEW DELHI held that the default mentioned under Rule 8(3A) of the Central Excise Rules is applicable in short payment of duty also. The assessee has contravened the provisions of Rule 8(1) and 8(3A) of the Central Excise Rules and excisable goods were removed from the factory in contravention of the Rule 8 and 8(3A) of the Central Excise Rules. - under Rule 8(3A) of the Central Excise Rules if assessee defaults in payment of duty beyond 30 days from due date the assessee shall pay excise duty for each consignment at the time of removal of goods without utilizing Cenvat credit till outstanding amount is paid along with interest and if this is not done then such goods shall be deemed to have been cleared without payment of duty and consequences and penalties as provided in these rules shall follow and accordingly - Demand of duty with interest confirmed - penalty reduced. - Decided against the assessee.
Issues Involved:
1. Default in payment of Central Excise duty due to excess utilization of Cenvat credit. 2. Applicability of Rule 8(3A) of Central Excise Rules, 2002. 3. Recovery of inadmissible Cenvat credit under Rule 14 of Cenvat Credit Rules, 2004. 4. Imposition of penalties under Section 11AC of Central Excise Act and Rule 25 of Central Excise Rules. Issue-wise Detailed Analysis: 1. Default in Payment of Central Excise Duty: The appellants, M/s. Paras Lubricants Ltd., defaulted in payment of Central Excise duty by utilizing inadmissible Cenvat credit. Specifically, they availed excess Cenvat credit of Rs. 25,063/- in August 2010 and Rs. 11,30,397/- in September 2010, leading to short payment of duty. Despite reversing the excess credit and paying interest later, the initial default continued beyond the permissible period, necessitating payment through Account Current/GAR-7 challan as per Rule 8(3A) of Central Excise Rules, 2002. 2. Applicability of Rule 8(3A) of Central Excise Rules, 2002: The appellants argued that Rule 8(3A) applies only in cases of total default in duty payment, not short payment due to incorrect credit utilization. However, the tribunal held that Rule 8(3A) applies to both short payment and total default, as established in the case of Godrej Hershey Ltd. v. Commissioner of Central Excise. The rule mandates consignment-wise duty payment without utilizing Cenvat credit if default continues beyond 30 days from the due date. 3. Recovery of Inadmissible Cenvat Credit: The tribunal upheld the recovery of wrongly availed Cenvat credit under Rule 14 of the Cenvat Credit Rules, 2004. The appellants had taken excess credit amounting to Rs. 25,063/- in August 2010 and Rs. 11,30,397/- in September/October 2010. The total amount recoverable was confirmed to be Rs. 11,55,460/- along with applicable interest. 4. Imposition of Penalties: Penalties were imposed under Section 11AC of the Central Excise Act and Rule 25 of the Central Excise Rules for contravening provisions related to duty payment. The tribunal reduced the penalty under Rule 25 to Rs. 5,00,000/- and under Rule 15 of the Cenvat Credit Rules to Rs. 3,00,000/-, considering the facts and circumstances of the case. Final Order: - The confirmation of demand for the period from 6-10-2010 to 5-11-2010 was upheld, to be paid in cash or through PLA. - The demand for the period from 28-1-2011 to July 2011 was set aside. - Penalty under Rule 25 was reduced to Rs. 5,00,000/-. - Reversal of Cenvat credit amounting to Rs. 11,55,460/- was upheld. - Penalty under Rule 15 was reduced to Rs. 3,00,000/-. - The appeal was disposed of in these terms.
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