9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (3) TMI 161 - AT - Central ExciseMaking pre- deposit though Cenvat Credit in compliance with stay order - Default in payment of duty - Rule 8 - levy of penalty - Revenue entertained a view that in return of provisions of Rule 8, the appellant should have paid duty out of PLA instead of utilizing the Cenvat credit account. - Held that - matter referred to larger bench with the following questions i) Whether it is correct in case of default to make payment from current account and direct pre-deposit of duty through current account /cash as held by Member (Technical) OR ii) Decision of Member (Judicial) justifying reversal from Cenvat account towards pre-deposit in relation to default is to be accepted.
Issues Involved:
1. Whether the defaulted amount should be paid through PLA or can be adjusted against Cenvat credit in view of Rule 8. 2. Imposition of penalty under Rule 25 read with Section 11AC or Rule 27 of Cenvat Credit Rules. Issue-wise Detailed Analysis: 1. Payment of Defaulted Amount: The appellant defaulted in payment of duty as per Rule 8 during October and November 2010. Although the short payment was later deposited in PLA, the appellant continued clearing goods by debiting duty from the Cenvat credit account. The Revenue argued that, according to Rule 8, the appellant should have paid duty from PLA instead of utilizing the Cenvat credit account. The proceedings resulted in a demand confirmation of Rs. 13,39,225/- along with interest and a penalty of Rs. 2,25,000/- under Rule 25, Rule 26, and Rule 27. The Tribunal referenced several decisions, including Solor Chemferts Pvt. Ltd. vs. Commissioner and F.S. Engineers vs. CCE, Ahmedabad, which held that utilizing Cenvat credit during default results only in interest loss to the Revenue, not a loss of duty. The Tribunal concluded that the utilization of Cenvat credit during default results in interest loss only. 2. Imposition of Penalty: Regarding the penalty, the Tribunal noted that the issue had been settled by the Gujarat High Court in CCE vs. Saurashtra Cement Ltd., which dismissed the Revenue's appeal against the Tribunal's order. The Tribunal followed this decision and imposed a penalty of Rs. 5,000/- under Rule 27, noting that the show cause notice proposed a penalty only under Rule 27, which prescribes a maximum penalty of Rs. 5,000/-. The Tribunal granted a waiver of the deposit of duty already paid through Cenvat credit and directed the appellant to deposit Rs. 5,000/- towards the penalty within four weeks, staying the recovery of the balance amount during the appeal's pendency. Separate Judgment by Manmohan Singh, J.: Utilization of Cenvat Credit Instead of PLA: Manmohan Singh, J. disagreed with the Tribunal's interpretation, emphasizing Rule 8(3A) of the Central Excise Rules, 2002, which mandates that in case of default, the duty must be paid consignment-wise through PLA without utilizing Cenvat credit until the outstanding amount, including interest, is paid. The judge cited the Gujarat High Court's decision in Commissioner of Central Excise vs. Harish Silk Industries, which held that payment from the Cenvat account is not permissible when ordered to be made from PLA due to default in fortnightly payment. The judge concluded that the utilization of Cenvat credit in such circumstances is legally improper and directed that the duty paid through Cenvat credit be paid through PLA/current account along with interest. Conclusion: Manmohan Singh, J. disagreed with the waiver of the defaulted amount paid through Cenvat credit and directed that the amount be paid through PLA/current account as a condition for hearing the appeal. The judge concurred with the imposition of a Rs. 5,000/- penalty but required the duty paid through Cenvat credit to be paid through PLA/current account along with interest, staying the balance amount of penalty until the final disposal of the appeal. Difference of Opinion: The difference of opinion was whether the defaulted amount should be paid from the current account (as held by Member (Technical)) or if the reversal from the Cenvat account towards pre-deposit in relation to default is acceptable (as held by Member (Judicial)).
|
