2016 (5) TMI 1067 - AT - Central Excise

Confiscation in lieu of redemption fine - Rule 25 of the Central Excise Rules - Default in payment of duty on due date during the period 2009-10 - Appellant suo moto calculated the short paid duty and discharged the same without pointed out by the department alongwith interest and intimated to the department - Held that - as per the said act of the appellant no show cause notice should have been issued for any demand for the reason that after payment of duty and their declaration in their letter no short payment of duty exist. Therefore, as per the provisions of Section 11A(2B), it is very clear that if duty and interest is paid on the ascertainment by the assessee the case should be concluded and no show cause notice should be issued. As per the given fact of the case, we do not see any reason why the appellant s case is not covered under the provisions of Section 11A(2B). Demand of duty alongwith interest and imposition of penalty - Utilization of Cenvat credit - Held that - the issue has been settled by the Hon ble Gujarat High Court judgment in case of Indsur Global Ltd Vs. Union of India 2014 (12) TMI 585 - GUJARAT HIGH COURT , wherein provision of bar of utilization of Cenvat credit in certain circumstances has been held ultravirus, accordingly the appellant is free for utilization of the Cenvat credit even during the default period of payment of duty. However, provision of consignment wise payment of duty still exist, therefore, to this extent there is non compliance of provisions, as a result appellant is require to pay interest from the date of clearance till date of payment of duty and not from the due date of monthly payment of duty. Therefore the appellant is required to pay the interest which is to be calculated from the date of clearance of the goods till the date of payment of duty. Since the appellant admittedly paid duty alongwith interest subject to correctness thereof, there was no need to issue notice for demand of such duty and appropriation thereof, consequently no penalty is imposable on the appellant. Consequential confiscation of the goods is also set aside. Decided partly in favour of appellant

Summary

Issues:
1. Confirmation of duty liability, confiscation of goods, imposition of redemption fine, and recovery of interest and penalty.
2. Appellant's contention of delayed payment of duty, utilization of Cenvat credit, and justification for non-issuance of show cause notice.
3. Revenue's argument regarding contravention of consignment-wise payment of duty.
4. Interpretation of Section 11A(2B) of the Central Excise Act, 1944.
5. Settlement of issues related to Cenvat credit utilization and interest payment.

Analysis:
1. The judgment involves the confirmation of duty liability, confiscation of goods, imposition of redemption fine, recovery of interest, and penalty. The Commissioner of Central Excise ordered the confiscation of goods valued at a specific amount, confirmed duty liability consignment-wise, and imposed penalties and interest under relevant provisions. The appellant challenged this order before the Appellate Tribunal.

2. The appellant argued that the delayed payment of duty was due to a clerical error, which they rectified by voluntarily paying the entire duty along with interest. They contended that the case fell under Section 11A(2B) of the Central Excise Act, 1944, which exempts the issuance of a show cause notice if the duty and interest are paid before notice service. The appellant also relied on a Gujarat High Court judgment regarding the utilization of Cenvat credit during default periods.

3. The Revenue maintained that the appellant contravened consignment-wise payment provisions despite the Gujarat High Court judgment's clarification on Cenvat credit utilization. They argued that the provisions related to clearance of goods and duty payment on a consignment basis were still applicable.

4. The Tribunal analyzed Section 11A(2B) of the Central Excise Act, 1944, which allows the assessee to pay duty and interest based on their own ascertainment before a notice is served. The Tribunal found that the appellant's proactive payment of duty and interest without departmental intervention exempted them from the need for a show cause notice.

5. The Tribunal upheld the appellant's right to utilize Cenvat credit during the default period but noted the non-compliance with consignment-wise duty payment provisions. Consequently, the Tribunal ordered the appellant to pay interest from the date of goods clearance until the duty payment date. The Tribunal concluded that since the duty and interest were paid by the appellant, no penalty was imposable, and the confiscation of goods was set aside.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the legal arguments and the Tribunal's decision.