2014 (6) TMI 92 - HC - Central Excise

Failure to deposit the monthly duty liability in terms of rule 8(1) of the Central Excise Rules - Liability to pay the duty consignment-wise and only through the PLA since the period of default was beyond 30 days from the due date - Duty paid by availing CENVAT Credit - Held that - Orders which had been passed by the Tribunal both on the original application as well as on the modification application are fair and proper. A prima-facie finding has been recorded that there was a breach on the part of the appellant to comply with the provisions of rule 8(1), which mandates that the duty has to be paid by the fifth day of the following month. Rule 8(3A) thereafter stipulates that if there is a default in payment of duty beyond 30 days from the due date, then notwithstanding anything contained in sub-rule (1) and sub-rule (4) of rule 3 of the Cenvat Credit Rules, 2004, the assessee has to pay duty for each consignment including interest without utilizing the Cenvat credit. It was the Cenvat credit which was utilized by the appellant despite the default. The Tribunal has directed the appellant to deposit an amount of ₹ 5,26,305/- with a further qualification that upon this deposit, the Cenvat credit would be re-credited to the account. We have also noted above that the only submission which was raised before the Tribunal, was based on an order passed in a miscellaneous application dated 12 June 2013. The Tribunal has furnished cogent ground for holding that the order on the miscellaneous application in some other matter had no application for the simple reason that in that case the appellant had deposited much more than what was directed to be deposited by way of pre-deposit - No substantial question of law arises - decided against assessee.

Summary

Issues:
- Failure to deposit monthly duty liability under Central Excise Rules
- Utilization of Cenvat credit despite default in payment
- Application for modification of pre-deposit order
- Compliance with Tribunal's order for deposit
- Consideration of previous orders and judgments

Failure to deposit monthly duty liability under Central Excise Rules:
The appellant failed to deposit the monthly duty liability as per rule 8(1) of the Central Excise Rules during the disputed period. Consequently, the Additional Commissioner confirmed a duty demand, interest, and penalties. The Commissioner (Appeals) upheld the duty demand and reduced the penalty. The Tribunal directed the appellant to pay the duty consignment-wise only through the PLA due to default beyond 30 days from the due date, prohibiting the utilization of Cenvat credit.

Utilization of Cenvat credit despite default in payment:
Despite the prohibition on utilizing Cenvat credit, the appellant used it to discharge the duty liability, leading to the Tribunal's direction to deposit a specified amount through the PLA. The Tribunal emphasized that the appellant forfeited the facility for Cenvat credit payment due to the default in monthly liability payment within the stipulated period.

Application for modification of pre-deposit order:
The appellant filed an application for modification of the stay, citing financial constraints and late deposit due to the closure of the unit. However, the Tribunal disposed of the application after nearly three years, considering the appellant's failure to comply with the deposit order.

Compliance with Tribunal's order for deposit:
The appellant did not comply with the Tribunal's order for deposit, leading to the filing of the application for modification. The Tribunal, in its impugned order, noted the appellant's failure to deposit any amount towards the pre-deposit despite the lapse of two years.

Consideration of previous orders and judgments:
The Tribunal considered a previous order granting relief to the appellant in a different matter where a higher amount was deposited than directed. However, in the present case, the appellant failed to deposit the required amount, leading to the Tribunal's decision to dismiss the appeal for not raising any substantial question of law.

In conclusion, the High Court upheld the Tribunal's orders on the original application and modification application, emphasizing the breach of duty payment rules and the prohibition on Cenvat credit utilization after default. The Court extended the time for compliance but ultimately dismissed the appeal, as it did not raise any substantial question of law.