2023 (6) TMI 293 - AT - Central Excise

Invocation of provisions of Rule 8(3A) of CCR - default in making monthly payment of duty or not - CENVAT Credit - wrong mentioning of assessee code number - whether the payment made mentioning the wrong assessee code number in the Central Excise account is not considered as any payment. HELD THAT - It is found from the records that the Ld.Commissioner failed to appreciate that the Appellants had three units at Kolkata, Hyderabad and Faridabad. For the month of February the appellants were required to make payment with 6th March 2010 and while making such payment for the March 2010 for an amount of Rs.58,40,599/- from their Kolkata unit from PLA code number of Hyderabad unit was wrongly mentioned in the GAR-7 Challan and as a result the amount though deposited, but under a wrong assessee code number. It is the submission of the Appellants in their grounds of appeal that mentioning of the wrong code number was through inadvertence by the person, who was handling the e-payment matters. On detection of the mistake the Appellants brought the matter to the notice of the Deputy Commissoiner of Central Excise, Taratala-II Division intimating that the total amount of Rs. 58,40,599/- was paid against the GAR-7 Challan dated 05.03.2010 and 06.03.2010. The Tribunal in the case of GUALA CLOSURE (INDIA) PVT. LTD. VERSUS COMMISSIONER OF C. EX., DAMAN 2008 (5) TMI 50 - CESTAT, AHMEDABAD held that an amount deposited under different heads in TR-6 Challan of the cost accounting problem, but since admittedly the Appellants paid the duty under different code, will not be held liable for making the payment again and the entire exercise would be revenue neutral and accordingly the demand of interest and imposition of penalty is uncalled for. The facts and circumstances of the case, the Board s Circular and the decision of the Tribunal show that making the payment of duty quoting wrong code number cannot be considered as non-payment and in such a situation, the proceeding initiated by the Ld.Commissioner is unwarranted. The issue is no more res integra and is squarely covered by the judgement of the Hon ble Calcutta High Court in the case of M/S. GOYAL MG GASES PVT. LTD VERSUS UNION OF INDIA OTHERS 2017 (8) TMI 1515 - CALCUTTA HIGH COURT , wherein it is categorically held that when Rule 8 (3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon ble Court further declared Rule 8(3A) as invalid which is not stayed by the Hon ble Supreme Court. The Hon ble Gujarat High Court in the case of INDSUR GLOBAL LTD. VERSUS UNION OF INDIA 2 2014 (12) TMI 585 - GUJARAT HIGH COURT has declared the words without utilizing Cenvat Credit under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant. In the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count. Appeal allowed.

Summary

Issues involved:
The main issue in this case is whether the payment made mentioning the wrong assessee code number in the Central Excise account is considered as a valid payment.

Comprehensive Details:
The Appellant had three units engaged in manufacturing electrical fans. In February 2010, they made a payment of Rs.58,40,599, but mistakenly mentioned the code number of the Hyderabad unit instead of the Kolkata unit in the payment documents. The mistake was later rectified by the Appellant themselves. However, the Department asked the Appellants to make the payment again, which they did. Subsequently, a Show Cause Notice was issued for the realization of the amount paid from the CENVAT Credit account. The Ld. Commissioner considered the initial payment as non-payment and confirmed the demand, leading to the appeal before the Tribunal.

The Tribunal found that the Appellant's inadvertent error in mentioning the wrong code number did not amount to non-payment. Referring to a Board's Circular and a previous Tribunal decision, it was established that making a payment with the wrong code number should not result in the demand for payment again. The Tribunal also cited a judgment by the Calcutta High Court which declared Rule 8(3A) as invalid, emphasizing that the Revenue cannot take a different stand contrary to such judgments. Additionally, the Gujarat High Court had declared the words "without utilizing CENVAT Credit" under Rule 8(3A) as ultra vires, allowing the discharge of duty by utilizing CENVAT Credit, as done by the Appellant in this case.

Based on the legal precedents and the invalidity of Rule 8(3A), the Tribunal set aside the impugned order, allowing the appeal and providing consequential reliefs to the Appellant.