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TMI Blog2013 (11) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... e wrongly availed Cenvat Credit along with interest, imposition of penalty is totally unwarranted - For the contravention of the Cenvat Credit Rules, 2004 the penalty as provided under Rule 15(3) of the Cenvat Credit Rules should suffice – Decided partly in favour of Assessee. - E/730/09 - Final Order No. A/881/2013-WZB/C-II(EB) - Dated:- 13-9-2013 - P R Chandrasekharan And Anil Choudhary, JJ. For the Appellant : Shri Vinay Sejpal, Adv. For the Respondent : Shri Shobha Ram, Comm. (AR) PER : P R Chandrasekharan The appeal is directed against Order-in-Original No.Belapur/69/Bel.II/R.II/Commr./WLH/2008-09 dated 31/03/2009 passed by Commissioner of Central Excise, Belapur. 2. The facts relevant to the case are as follows: 2.1 The appellant, M/s. Pranav Construction Systems Pvt. Ltd. are manufacturers of excisable goods falling under Chapters 40 73 of Central Excise Tariff Act. For the month of March 2007, the duty liability of Rs.84,49,174/-was to be paid by 31/03/2007. The appellant paid a sum of Rs.35,96,124/- from the PLA account and a sum of Rs.46,92,795/- from the Cenvat Credit account. There is no dispute about these payments; thus, the outstanding duty li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... navailable Cenvat Credit as stated in show cause notice. Later they realized the error and paid the duty of Rs.1,60,212/- and Higher Secondary Cess of Rs.43/-vide E.No.003 dated 30/04/2008 with interest. In other words, they paid the duty due after 13 months. Accordingly, the outstanding duty for March 2007 to the extent of excess amount debited through the Cenvat Credit for following month is not proper and not in consonance with Rule 3 of the Cenvat Credit Rules, 2004. The relevant applicable extract of Rule 3 (4) of the Cenvat Credit Rules, 2004 is reproduced below: Provided that while paying duty of excise or service tax, as the case may be the Cenvat credit shall be utilised only to the extent such credit is available on the last day or quarter, as the case may be, for the payment of duty or tax relating to that month or quarter as the case may be Thus, it is concluded that the Cenvat Credit earned during the month of April 2007 has been utilized for payment of duty for earlier month, in contravention of provisions of Rule 3 (4) of Cenvat Credit Rules, 2004. The support for above discussion is drawn from the judgement of Tribunal Delhi in the case of Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of duty in respect of five months. The reasons for short-payment that has occurred have not been dealt with in the show cause notice, order in original and the order in appeal. Under these circumstances, the finding of the default in payment and consequent liabilities are difficult to sustain. In other words, in the given facts and circumstances of the case, Rule 8(3A) cannot be invoked. 3.3 It is further contended that this Tribunal in the case of Solar Chemferts Pvt. Ltd., Vs. CCE, Thane -2012 (276) ELT 273 (Tri-Mum) had held as follows: It is also relevant to note that even the consequence under the Act are that duty will have to be paid, interest will have to be paid, penalty will have to be paid and goods are liable to confiscation. In fact there is nothing in the Act which will bar payment of such short paid duty from Cenvat credit. Once the Act and Rule 8(3A) are read together a harmonious interpretation will be that during the period of default, payment through Cenvat credit will not be due discharge of duty. Interest will be payable so long as there is no proper discharge of duty. This is a consequence from Act but that will follow even if it is not mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m utilizing Cenvat Credit account is not with reference to arrears but the entire credit lying in the account. Therefore, the assessee has to pay excise duty through account current for each consignment at the time of removal. Since the Cenvat Credit was unavailable, utilizing the same for payment of duty was an exercise in nullify and could not be recognized as payment towards duty. In the light of this decision of the Hon'ble High Court of Karnataka, the other decisions relied upon by the appellant becomes irrelevant. Accordingly, he prays for upholding the impugned order. 5. In his rejoinder, the Ld. Counsel for the appellant submits that the decision of Hon'ble High Court of Karnataka in the case of Manjunatha Industries cited by the Revenue was passed in the context of a stay order and in the said order, the Hon'ble High Court made it clear that the observations therein is not binding on the appellate authority, while deciding the merits of the appeal and therefore, the said decision of the Hon'ble High Court of Karnataka cannot be taken as a precedent. 6. We have carefully considered the submissions made by both the sides. 6.1 It would be appropriate at this juncture to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves provide for penal consequences. In other words, the Cenvat Credit Rules, 2004 is a complete code in itself providing for the terms and conditions of taking and utilization of credit and also for consequences on account of non-compliance with the provisions of said Rules. Therefore, if there is an error in availing the credit or wrong availment of credit, the Cenvat Credit Rules themselves can deal with the situation and there is no need to invoke the provisions of Central Excise Rules. In the present case the appellant has wrongly utilised Cenvat Credit of Rs.1,60,225/- for payment of duty since the credit was earned subsequent to the month in which the goods were cleared and therefore, the appellant could not have utilised the credit for payment of duty on the goods cleared during the preceding month. It was thus a case of wrong availment of credit and not a case of default in payment of excise duty on the goods. The total duty liability for the month of March 2007 was Rs. 84,49,174/-. A sum of Rs. 46,92,795/- was discharged through Cenvat Credit during the month of March 2007 and another amount of Rs. 35,96,124/- was paid through PLA. Thus, short payment of duty was Rs. 1,60, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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