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2021 (11) TMI 116 - AT - Central ExciseDemand of differential duty - upward revision of price - price variation/escalation clause - Cenvat credit available at the time of raising supplementary invoices - appellant alleged that the supplementary invoices were raised and, therefore, they are relatable to the clearances already made during the previous months - Vires of proviso to Rule 3 (4) of Cenvat Credit Rules, 2004 - interest under Section 11AB of CEA - HELD THAT - The question as to whether the supplementary invoices relate to the date of original clearance or the date on which the supplementary invoice was raised has been decided by the Supreme Court in M/S. STEEL AUTHORITY OF INDIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2019 (5) TMI 657 - SUPREME COURT . Accordingly, interest under Section 11AB needs to be paid by the appellant on the differential amount of duty. Whether Cenvat credit can be utilized for payment of duty in view of the proviso to Rule 3 (4) of the Cenvat Credit Rules, 2004? - HELD THAT - The High Court of Gujarat in ADVANCE SURFACTANTS INDIA LTD VERSUS UNION OF INDIA 2017 (8) TMI 594 - GUJARAT HIGH COURT has held that this proviso is ultravires. No judgment of any other High Court or Supreme Court has been produced before us to show that a contrary view has been taken in respect of this proviso. Therefore, the appellant was correct in utilizing the Cenvat credit for payment of the excise duty. Levy of penalty - HELD THAT - The assessee has not violated any provision of the Act or the Rules to attract penalty under Rule 25 of the Central Excise Rules, 2002. The appellant on its own had paid the differential duty on the supplementary invoices which were raised - the penalty imposed under Rule 25 of the Central Excise Rules, 2002 is set aside. Appeal allowed in part.
Issues:
- Utilization of Cenvat credit for payment of differential duty on supplementary invoices - Validity of proviso to Rule 3 (4) of Cenvat Credit Rules, 2004 - Imposition of interest under Section 11AB - Imposition of penalty under Rule 25 of Central Excise Rules, 2002 and Rule 15 of Cenvat Credit Rules, 2004 Utilization of Cenvat Credit: The appellant contested that the supplementary invoices were related to the month they were raised, not the original clearance month, as duty became payable only upon price enhancement. Citing a Tribunal decision, they argued that duty liability arises when supplementary invoices are issued, allowing the use of Cenvat credit. The High Court upheld this view, emphasizing that the buyer's liability must be known at the transaction time. The High Court's decision was supported by the Tribunal, leading to setting aside the demand for cash payment of duty and allowing the use of Cenvat credit. Validity of Proviso to Rule 3 (4) of Cenvat Credit Rules, 2004: The appellant relied on a High Court ruling declaring the proviso to Rule 3 (4) of Cenvat Credit Rules, 2004 as ultra vires. As no contradictory judgments were presented, the appellant's use of Cenvat credit for duty payment was deemed correct, further supporting the appellant's position. Imposition of Interest under Section 11AB: Regarding interest under Section 11AB, the appellant argued that as duty related to the date of supplementary invoices, no interest was due. However, the Tribunal ruled that interest needed to be paid on the differential duty amount from the date of clearance to the payment date, aligning with the Supreme Court's decision on retrospective price escalation. Imposition of Penalty: The appellant contended that no penalty should be imposed as they had paid duty on the supplementary invoices promptly. The Tribunal agreed, finding no violation of laws or rules warranting a penalty under Rule 25 of Central Excise Rules, 2002. Consequently, the penalty was set aside, and the impugned order was modified accordingly. In conclusion, the Tribunal partially allowed the appeal by modifying the impugned order, setting aside the demand for cash payment of duty, requiring payment of interest under Section 11AB, and dismissing the penalty imposed under Rule 25 of Central Excise Rules, 2002.
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