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2013 (9) TMI 693 - AT - Central ExciseManner of payment of duty - Default under rule 8(3A) -Utilization of Cenvat credit - Held that - for the period April to June 2008, the assessee defaulted payments of duty beyond the grace period. The duty for this period was paid with interest on 04.08.2008. However, the assessee continued to be a defaulter for purposes of Rule 8(3A) and consequently became liable to pay duty on each clearance in July 2008, from the account current, without utilizing CENVAT credit. However CENVAT credit was utilized to the extent for the entire July 2008 - The goods on which the duty was so paid should be deemed to have been cleared without payment of duty as per Rule 8(3A). If that be so, the demand confirmed against the assessee under Section 11A cannot be resisted by them. However, they have no liability to pay interest under Section 11AB of the Act inasmuch as interest on equal amount of CENVAT credit was paid by them - Decided against assessee.
Issues:
1. Default in payment of excise duty for April, May, and June 2008. 2. Utilization of CENVAT credit for payment of duty in July 2008. 3. Interpretation of Rule 8 (3A) and Rule 8 (3). 4. Liability of the appellant to pay duty from PLA for July 2008. 5. Application of the principle of restitution for CENVAT credit utilized by the appellant. Analysis: 1. The appellant, engaged in manufacturing excisable goods, failed to pay duty for April, May, and June 2008 within the stipulated time frame, resulting in delays of 92, 61, and 30 days respectively. The duty for these months was eventually paid from PLA on 04.08.2008 with interest. Subsequently, for July 2008, the appellant utilized CENVAT credit for duty payment, contrary to Rule 8 (3A) which mandated consignment-wise duty payment from PLA without using CENVAT credit. 2. The appellant contended that their duty payment for April to June 2008, made before 5th August 2008, should be governed by Rule 8 (3) instead of Rule 8 (3A). They argued that even if Rule 8 (3A) applied, they could pay duty from PLA and claim recredit in the CENVAT account, citing precedents to support their interpretation. 3. The Deputy Commissioner (AR) argued in favor of Rule 8 (3A), asserting that the appellant's use of CENVAT credit in July 2008 attracted Section 11A of the Central Excise Act, deeming goods cleared without duty payment. Precedents were cited to emphasize the mandatory nature of Rule 8 (3A) and the inapplicability of Rule 8 (3) in the given circumstances. 4. The judgment acknowledged the applicability of Rule 8 (3A) over Rule 8 (3) due to the appellant's prior default in duty payments. Despite the department's oversight in calculating the due date for duty payment in July 2008, the appellant was held liable to pay duty exclusively from PLA for that month. The appellant's use of CENVAT credit was deemed a violation of Rule 8 (3A), justifying the demand of duty under Section 11A. 5. To rectify the situation, the appellant was allowed to take credit of the equivalent duty amount in their CENVAT account, following the principle of restitution. This decision aimed to restore the appellant to a position as if the CENVAT credit had not been utilized, considering the department's error in applying Rule 8 (3A) and the equitable principle of restitution. In conclusion, while upholding the duty demand against the appellant, the judgment balanced legal provisions with equitable considerations to provide a fair resolution to the issues at hand.
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