2018 (5) TMI 540 - AT - Central Excise

Payment of the duty liability in cash on consignment basis - Rule 8(3A) of the Central Excise Rules - Held that - the Adjudicating Authority is correct and in the case in hand has considered the entire factual matrix in its correct perspective and came to a conclusion that there is no need for confirmation demands on duty which were debited in CENVAT credit by the main appellant and also there is no necessity to imposes on the respondents - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Rule 8(3A) of Central Excise Rules, 2002 regarding discharge of duty liability.
2. Validity of invoking provisions of Rule 8(1) of Central Excise Rules for duty payment.
3. Consideration of delayed realization of cheques in payment of duty.
4. Impact of legal judgments on duty payment and penalties.
5. Assessment of default in duty payment and imposition of penalties.

Analysis:
1. The case involved appeals by the Revenue challenging an Order-in-Original regarding duty liability by a cement manufacturer. The main issue revolved around the application of Rule 8(3A) of the Central Excise Rules, 2002, which amends the discharge of duty liability during a default period. The Revenue contended that despite cheque presentations, duty payment was not made due to insufficient funds in the bank accounts, leading to delayed realization of cheques. However, the Adjudicating Authority considered the factual matrix and concluded that there was no default in duty payment as the cheques were eventually realized and credited to the Government account after interest payment for the delay.

2. The Revenue challenged the Adjudicating Authority's decision based on Rule 8(1) of the Central Excise Rules, arguing that the duty liability should have been paid in cash on a consignment basis. The Authority's reasoned decision highlighted that the presentation of cheques should be deemed as duty payment upon realization, which occurred in this case, negating the need for additional demands or penalties on the respondents.

3. The case also addressed the issue of delayed realization of cheques impacting duty payment. The Adjudicating Authority emphasized that the delay was due to a financial crisis faced by the manufacturer, leading to belated realization of cheques. Despite this, the duty liability was eventually settled along with interest, indicating a pragmatic view should be taken rather than a technical approach in assessing the situation.

4. Legal judgments were cited by the Counsel, indicating that Rule 8(3A) of the Central Excise Rules had been struck down by various High Courts. The Tribunal acknowledged these decisions and found no legal basis for the Revenue's demands, ultimately rejecting the appeals based on the established legal principles and factual analysis.

5. The Tribunal concurred with the Adjudicating Authority's findings, emphasizing that there was no default in duty payment by the manufacturer. The case was viewed in a holistic manner considering the circumstances, financial crisis, and subsequent settlement of duty liabilities, leading to the rejection of the Revenue's appeals and the failure of proposals for penalties and interest imposition on the respondents.