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TMI Blog2012 (6) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Act to recover duty short paid. Normally such short-payment can be made good by paying duty through Cenvat credit as authorized by Central Excise Rules, 2002 and Cenvat Credit Rules, 2004. So there should be a reason why such payment cannot be accepted in this case. The reason being quoted is that this is a situation covered by Rule 8(3A) and the Rule prescribes that so long as the assessee is in default for any previous month payment through Cenvat credit is not a proper discharge of duty liability. This prohibition gets lifted the moment the default is made good along with appropriate interest on defaulted amount and normal situation is restored. Imposition of penalty under Rule 25 - In view of the decision of Gujarat High Court in the case of CCE Vs. Saurashtra Cement Ltd (2010 (9) TMI 422 (HC) ) penalty under Rule 27 is the appropriate penalty and reduce the penalty on the Appellants to Rs.5,000/-. Appeal is thus partially allowed by setting aside the duty demanded and reducing the penalty to Rs.5,000/-. - E/Misc No.222/2010 & Misc No.700/2011 - A/60/2012-EX(BR) - Dated:- 25-1-2012 - S S Kang, Mathew John, JJ. For Appellant: Shri Harishankar, Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date the assesse pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow.] (4) The provisions of section 11 of the Act shall be applicable for recovery of the duty as assessed under rule 6 and the interest under sub-rule (3) in the same manner as they are applicable for recovery of any duty or other sums payable to the Central Government." 4. Now the facts as stated in the impugned order, are as under: "From concerned ER-1(s), it appeared that default in payment of duty remained continue beyond 30 days of the said due dates. During the period June 2006 to March, 2007 and April 2007 to March, 2008, the party has paid an amount of Rs.61,07,965/- and Rs.55,16,681/- respectively through PLA and the rest amount i.e. Rs.67,88,315/- and Rs.1,00,55,614/-respectively through cenvat credit account as Central Excise duty. This appeared in contravention to the provisions of Rule 8(3A) ibid, as the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 11A of the Central Excise Act, 1944 read with Rule 8(3A) of the said rules along with appropriation of Rs.61,07,965/- for the period June 2006 to March, 2007 and of Rs.55,16,681/- for the period April 2007 to March 2008 respectively already debited against the amount of duty so payable; ii) Demand of interest leviable on the amount of duty mentioned above under Section 11AB of the said Act read with Rule 8(3A) of the said rules and appropriation of interest of Rs.81,121/- plus Rs.26,321/- for the period June 2006 to March, 2007 and Rs 10,825/- plus Rs.5456/- for the period April 2007 to March, 2008 respectively already deposited against the amount of interest so payable; iii) Imposition of penalty under Rule 25 of the said rules read with Section 11AC of the said Act for deliberate contravention of the rules as aforementioned." 5. The appellants have submitted the facts of the case as under: i) Total duty payable for June 2006 was Rs.10,38,005/-. At the end of the 30 days amnesty period stipulated in Rule 8(3A) supra, duty of Rs.5,59,148/- remained to be paid this was paid on 25.9.06 through PLA. However, interest of Rs.11,610/- inadvertently remained unpai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of the department and paid the differential interest involved. The appellants contests that this short payment of interest by itself cannot be considered as default but it is a matter of short payment of interest and this matter has been condoned by the Commissioner himself vide para 5.7 of the order dated 31-12-2010 brought on record through Misc E/700/2011 Ex. So this cannot be a reason to demand duty afresh for time till this small differential payment in interest was made. 8. According to the appellants the real default was only for the following period (i) 04-08-2006 to 19-12-2006 because all payments to be made through PLA upto this date was paid (ii) Thereafter there was a default in payment of dues for Jan 2007 which default starts from 08-03-2007. The defaulted amount was paid on 13-03-07 but there was no clearance of goods during the defaulting period of 08-03-07 to 13-03-2007. These contentions are recorded by the adjudicating authority in para 13 of the order and not controverted. The finding is only an emphatic statement in para 22 of the impugned order that they continued default from June 2006 to March 2008 without explaining which submission on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He submits that as per the rule the appellants could not have utilized Cenvat credit during the defaulting period and duty paid during the defaulting period using Cenvat credit is no payment at all and that is why the duty is now demanded in cash. He interprets Rule 8(3A) to mean that the Appellants are not eligible for the credit itself. However he is not able to give a proper reasoning for the faulty determination of the defaulting period starting from the very beginning of the month for which payment of duty has been defaulted. 12. We have considered the issue of short payment of interest for the duty which was defaulted. We do not consider that such an error in calculation which was never pointed out to the assesse can take the assesse into the mischief of Rule 8(3A). Default in payment of duty is different from short payment of duty or interest. Further the Commissioner himself as condoned this issue as recorded in para 5.7 of the order dated 31-12-2010. So we do not propose to dwell on this issue in greater detail. 13. We have considered the facts of the case, the law applicable and the arguments. From the provisions in Rule 8(3A) it is clear that the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. So interest on duty due on each clearance from the date of clearance to the date on which default was made good will be payable at rate specified under section 11AB of the Act till the defaulted amount is paid fully along with interest. That is to say there are two interest components to be paid (i) interest on the defaulted amount till it is paid (ii) interest on duty payable on all the clearances during the defaulted period which duty is not through cash but paid through Cenvat credit. If there was any short levy of interest which was not pointed out by the department when interest was paid such shortfall by itself cannot be reason for considering the assessee to be in default till the payment of the interest correctly. So Interest for the amounts of duty defaulted for the months of June 06 to September 06 is payable. Further interest on duty due on clearances from 04-08-2006 to 19-12-2006 and also from 08-03-2007 to 13-03-2007 is payable by the appellants. The calculations may not have been checked seriously by the department because the department is too much focused on fastening liabilities too disproportionate to the offence by denying Cenvat credit and not on calculatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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