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TMI Blog2013 (4) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... contravened the provisions of Rule 8(1) and 8(3A) of the Central Excise Rules and excisable goods were removed from the factory in contravention of the Rule 8 and 8(3A) of the Central Excise Rules. - under Rule 8(3A) of the Central Excise Rules if assessee defaults in payment of duty beyond 30 days from due date the assessee shall pay excise duty for each consignment at the time of removal of goods without utilizing Cenvat credit till outstanding amount is paid along with interest and if this is not done then such goods shall be deemed to have been cleared without payment of duty and consequences and penalties as provided in these rules shall follow and accordingly - Demand of duty with interest confirmed - penalty reduced. - Decided against the assessee. - E/448/2012-Mum - A/370/2012-WZB/C-II(EB) - Dated:- 15-6-2012 - S/Shri S.S. Kang, Sahab Singh, JJ. REPRESENTED BY : Shri V. Sridharan, Advocate, for the Appellant. Shri V.K. Singh, Addl. Commissioner (AR), for the Respondent. [Order per : Sahab Singh, Member (T)]. This is an appeal filed by M/s. Paras Lubricants Ltd. (hereinafter referred to as appellants) against the Order-in-Original No. 52/KLG(52)COMMR/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit three times against the same bill of entry. Thus they had taken excess credit of Rs. 11,30,397 on the basis of the said bill of entry. It was also noticed by the department that the said bill of entry was received by them in October 2010 whereas they had taken the Cenvat credit on the same in the month of September 2010 on the basis of photocopy of the bill of entry. The total duty payable for the month of September 2010 was Rs. 15,17,301/- after deducting the amount of Rs. 16,95,598/- as ineligible credit. It was found that they have short paid the duty of Rs. 10,18,870/- in the month of September 2010. Similarly, in the month of October the assessee has utilized Rs. 19,22,231/- Cenvat credit as against the total duty liability in October of Rs. 26,28,087/- and paid Rs. 5,79,957/- through GAR Challan and therefore there was a short payment of duty in the month of October to the extent of Rs. 1,25,899/-. From the above it is noticed that for the month of August 2010 there was a default to the extent of Rs. 24,416/- and this amount has not been paid by the assessee and for the month of September 2010 and October 2010 default was to the extent of Rs. 10,18,870/- and Rs. 1,25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed under the Central Excise Rules and thereafter he read over to us provisions of Rule 8(3A) of the Central Excise Rules. He, therefore submitted that Rule 8(3A) would be applicable only in case of default in payment of duty and since the appellants have paid the duty correctly there is no default in payment of Central Excise duty. He submitted that the demand of Rs. 1,52,19,065/- has been confirmed by the Commissioner consequent to incorrect application of Rule 8(3A) of Central Excise Rules and their case is inadvertent excess availment of credit of Rs. 25,063/- requiring invocation of Rule 14 of the Cenvat Credit Rules and not the Rule 8(3A) of the Central Excise Rules. Demand of Rs. 1,52,19,065/- is very disproportionate to the excess credit availed by the appellant amounting to Rs. 25,063/-. He further argued that as regards the default for the month of September and October 2010 on being pointed out by the Department they have paid the amount of Rs. 61,57,980/- in the month of November 2010, December 2010 and January 2011 and therefore the finding of the Commissioner that appellants did not pay undue benefit is not correct. He further submitted that there is no loss to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty this inadmissible Cenvat credit has been utilized by them. Since the credit was not admissible to them duty short paid by them was required to be paid by them in cash as there was no sufficient balance in their Cenvat credit accounts and once there is a short payment of duty requirement of Rule 8(1) has not been fulfilled. Accordingly, the provisions of Rule 8(3A) are applicable in the present case. Since the default was continuing they were supposed to pay the duty in cash/through PLA consignmentwise till the month of July 2011 and as such the duty of Rs. 1,52,19,065/- has correctly been demanded. Since there is a contravention of provisions of Rule 8(3A) penalty under Section 11AC has correctly been imposed on them and for taking inadmissible credit the penalty under Rule 15 of the Cenvat Credit Rules has been imposed on the appellants. Therefore, he submitted that appeal filed by the appellant needs to be dismissed. Revenue relied upon decision of Hon ble Gujarat High Court in the case of Precision Fasteners Ltd. v. Commissioner of Central Excise reported in 2011 (268) E.L.T. 163 (Guj.) and the Tribunal decision in the case of Parekh Bright Bars Pvt. Ltd. v. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise w.e.f. October 2010 to July 2011 and accordingly the show cause notice was issued and adjudicated by the Commissioner. 7. One of the arguments taken by the appellant is that they have taken the excess Cenvat credit inadvertently and which has resulted in short payment of duty and as they have filed E.R.1 returns in time the short payment of duty on account of inadmissible Cenvat credit would not result in the violation of Rule 8(1) of the Central Excise Rules and therefore the provisions of Rule 8(3A) are not applicable and Revenue can initiate the action for recovery of inadmissible Cenvat Credit under Rule 14 of the Cenvat Credit Rules. We find that Rule 8 defines manner of payment of duty and as per the Rule 8(1) the duty on the goods removed from the factory during a month shall be paid by 6th day of the following month, if the duty is paid electronically through internet banking and by the 5th day of the following month, in any other case If the assessee defaults in payment of duty beyond 30 days from the due date as prescribed in sub-rule (1) then assessee is required to pay the duty consignmentwise at the time of removal without utilizing the Cenvat credit till the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g whether there is short payment or less payment can arise only after there is default in complying with the obligation prescribed under sub-rule (1). 23. Besides, the contention that it is only in case of total default in relation to the entire month that would amount to non-compliance of sub-rule (1) of Rule 8 if accepted, it would result in rendering the explanation to be nugatory. The Explanation (a) to the said Rule specifically provides that the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the Central Government by the specified date. That apart sub-rule (1) nowhere makes any differentiation between payment of duty for the entire month or part thereof. It merely prescribes that the clearance during a particular month, the obligation of payment of duty in respect thereof should be cleared by the specific date of the subsequent month. To accept the contention sought to be canvassed on behalf of the appellants would virtually amount to read down the Rule 8(1) and to provide something more than what is stated and what is revealed from the actual words used in the said Rule by the rule making authority. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment occurred on or after 1-6-2006 and not to those occurred prior to the said dates. Revenue issued a notice under Section 11 of the Act against which party went to High Court. We find in this case the issue related to the payment of duty for the month of January 2005 and February 2005 and the duty for the month of January 2005 was paid on 15th June 2006 after the amendment of Rule 8(3A) whereas in the case before us the clearances were made in the month of August 2010, September 2010 and October 2010 and during these months Rule 8(3A) was very much in the operation. We, therefore are of the view that facts of the cited case are distinguishable from the present case. 10. The learned Counsel submitted that since the appellant have availed the credit wrongly the provisions of Rule 14 of the Cenvat Credit Rules are applicable in the present case and the default provisions of Rule 8(3A) are not attracted. We find that once the credit is taken wrongly and which has resulted in short payment of duty in a particular month in that case there will be default for that particular month and the provisions of Rule 8(3A) come into play. The argument of the Counsel is acceptable only when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month of September and October 2010 were paid by the assessee upto 25th January 2011. As per letter of Superintendent dt. 18-1-2011 addressed to the assessee default amount of Rs. 1,25,899/- for the month of October 2010 was paid by assessee on 25th January 2011. We have already ordered that assessee is required to pay duty along with interest in cash or through PLA for the month of October 2010 (w.e.f. 6-10-2010) for default of August 2010. Once the duty for the period of October 2010 is paid in cash or through PLA along with interest, there may not be any default for October 2010 as default for October 2010 was due to utilization of ineligible Cenvat credit. The assessee has paid the default amount of Rs. 1,25,899/- for October 2010 on 25-1-2011. We, therefore, find that this amount of Rs. 1,25,899/- paid on 25-1-2011 is sufficient to cover the default of Rs. 24,416/- pertaining to August 2010. Once the default of August 2010 stands settled on 25-1-2011 there is no justification for demanding duty after 25th January 2011 to July 2011. 13. Since default in payment of duty for the period of August 2010 continued beyond 30 days and assessee did not pay consignmentwise duty, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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