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TMI Blog2015 (9) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... ers would have taken the Cenvat credit resulting in double loss to the Government. - appellant would be required to pay duty of ₹ 16.70 lakhs through cash and on payment of this amount through cash, they can re-credit the amount of ₹ 16.70 lakhs debited earlier in their Cenvat credit account for payment of duty. While the appellant company, in the ER-1 returns filed by them, had reported the payment of self assessed duty, 18 cheques for payment of duty amounting to ₹ 34,37,391/- presented by the appellant company to the bank were not honoured due to insufficient balance in his account and in respect of 13 cheques for payment of duty amounting to ₹ 26,26,500/- whose particulars were mentioned in the returns, had never been presented to the bank. The act of dishonouring of 18 cheques of an amount of ₹ 34,37,391/- and not presenting the cheques for an amount of ₹ 26,26,500/- was never reported by the appellant company to the Department and, as such, this fact, has prima facie, been concealed. This conduct of the appellant, prima facie, would amount to clearance of goods without any intention to pay the duty and, as such, in such a situation, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CCE vs. Saurashtra Cement Ltd. reported as [2010 (260) ELT 71 (Guj)]. We accordingly direct the applicant to deposit an amount of ₹ 5000/- (Rupees Five thousand only) towards penalty within the said period, subject to which the penalty imposed upon the applicant would be dispensed with and its recovery stayed. 5. Matter to come up for ascertaining compliance on 15.11.2013. Both the stay petitions are disposed of in the above terms. (dictated and pronounced in the open court) ORDER PER MANMOHAN SINGH: 6. I have gone through the draft order recorded by learned member (J) wherein default in payment of duty by M/s Bakewell Agro Ltd. was examined on stay application. Following issues emerges out of above order (a). Out of confirmed demand of duty of ₹ 88,80,952, ₹ 16.70 lakh was deposited through cenvat credit and rest was paid through PLA. Payment through cenvat credit has been accepted as proper payment under the provisions of rule 8 of Central Excise Rules 2002 (b) interest has been directed to be paid (c) Regarding imposition of penalty, penalty under rules 27 of central excise rules has been levied restricting it to & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e limit of 30 days. Table B given below clearly brings out position:- Table B Month Amt. of duty payable Amt. of duty paid form Cenvat Credit Amt. of duty paid from PLA Date of payment of duty from PLA Amt. defaulted Mar 08 1328714 357548 5,15,000/- 4,56,166/- 10.11.08 05.12.08 971166/- Apr 08 1517762 744573 0 773189/- May 08 1049462 323496* 0 1049462/- Jun 08 853808 0 431398 June 08 422410/- July 08 904948 0 319300 8.7.08 10.7.08 4.8.08 585648/- Aug 08 1414357 0 0 - 1414357/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.08.08 Cheques returned due to insufficient fund Cleared on 04.08.08 2. 16.07.08 079925 206000.00 22.08.08 3. 19.07.08 079926 190550.00 22.08.08 4. 31.07.08 904008 92700.00 22.08.08 5. 31.07.08 904007 515000.00 22.08.08 Cheques returned due to insufficient fund 6. August 08 04.08.08 079928 206000.00 Cheque was not presented to the bank 7. 07.08.08 079930 92700.00 Cheques returned due to insufficient fund 8. 09.08.08 079931 46350.00 9. 12.08.08 079932 257500.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 660 206000.00 30. 14.11.08 009662 206000.00 31. 21.11.08 009666 206000.00 05.12.08 Cheques returned due to insufficient fund 32. 25.11.08 009667 206000.00 05.12.08 Cheques returned due to insufficient fund Total 61,56,591 12. There is also allegation that appellant has enclosed bogus counterfoils of the cheques having stamp of Punjab National Bank branch. However, fact is that there cheques were never presented to the Bank. This act of appellants misleading was with conscious and exclusive knowing well that appellant has no funds in the Bank but intended to avail the benefit at the cost of revenue. 13. Amount of demand expect ₹ 16.70 lakh were paid through PLA. Interest on that amount is payable. I concur regarding payment of interest. But regarding payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of above, I am of the firm view that deposited amount in Cenvat credit is required to paid through cash or current account along with leviable interest. Issue regarding penalty under rule 25 or rule 27 17. It is observed from draft order that penalty under rule 27 has been proposed. However, as facts stated above, this is not simple question of default where duty is later paid from current account. Here is case where amount of duty to the tune of ₹ 16.70 lakh has been paid through Cenvat credit which is specifically barred. In my view and latest legal position, this amount can not be allowed to be adjusted against demand for payment though cash/current account. Matter is already clarified by Gujarat High Court as above. 18. Further fraud has also been found and it is clear that only counterfeits of Bank with stamps were produced and on enquiry, no cheques were found to be presented to Bank at all. It is on record that branch manager of the Punjab National Bank vide its letter dated 29.12.2008, inter alia, confirmed that, out of 32 cheques, only one cheque3 of ₹ 92,700.00 (mentioned at sl. No. 4 of Table-1 given under para 1.4), had been credited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANMOHANSINGH) (ARCHANA WADHWA) MEMBER (TECHNICAL) MEMBER (JUDICIAL) ORDER Per. Rakesh Kumar :- 22. The appellant are a manufacturer of biscuits chargeable to Central Excise duty under sub-heading 19053100 of the Central Excise Tariff. They are manufacturing the biscuits which are dutiable as well as exempted and avail the Cenvat credit of Central Excise duty paid on inputs and capital goods and of service tax paid on input services as per the provisions of Cenvat Credit Rules, 2004. During the scrutiny of the ER-1 returns filed by the appellant during March 2008 to June 2008 period, it was observed that the appellant had defaulted in payment of duty in as much as the duty paid by them for each month was less than the duty mentioned as payable in the ER-1 return for that month. Subsequently the Range ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made with Shri S.K. Jain, he, in his statement recorded on 19/11/09 stated that while at the end of every month, he used to calculate the duty payable during the month, the Cenvat credit available and the net duty to be paid through cash, the financial matters were not being looked after by him, that Shri Feroz Malik, Managing Director used to issue the cheques for payment of duty and either Shri Feroz Malik himself or other employees of the company used to deposit the cheques in the bank, that he had never deposited the cheques for depositing the duty, and that after preparing the ER-1 return, he used to ask Shri Malik about the cash/cheque/GAR7/TR-6 challans to be submitted with return and Shri Malik used to give him the TR-6/GAR-7/ cheque counter foil which were enclosed in the ER-1 return. The total defaulted amount payable by the appellant company appeared to be ₹ 88,80,352/- and it also appeared that the appellant had concealed his default from the Department and had tried to hoodwink the Department either by mentioning the cheque numbers of the cheques which were never presented in the bank or by presenting the cheques in the bank without having sufficient balance. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 35F, should deposit in cash the amount of ₹ 16.70 lakhs earlier paid by him through Cenvat credit account and should also pay pre-deposit of an amount of ₹ 25,00,000/- towards penalty. Hon ble Member (Technical) in his judgment has relied upon judgment of Hon ble Gujarat High Court in the case of CCE vs. Harish Silk Industries reported in 2013 (288) E.L.T. 74 (Guj.) and also the judgment of Hon ble Madras High Court in the case of Unirols Airtex vs. Assistant Commr. of C. Ex., Coimbatore reported in 2013 (296) E.L.T. 449 (Mad.) and has also observed that in view of mis-representation and fraud on the part of the assessee, the quantum of penalty imposed by the Commissioner appears to be justified. 25. On account of difference of opinion between Hon ble Member (Judicial) and Hon ble Member (Technical), the following point has been referred to the undersigned for decision :- whether payment of duty arising out of default is to be paid through Cenvat credit and pre-deposit of penalty is to be restricted to ₹ 5,000/- as held by Hon ble Member (Judicial) based on the judgment of Hon ble Gujarat High Court in the case of CCE Customs vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication before the BIFR but subsequently on account of objection from the bank, the application was rejected. He also cited the judgment of Tribunal in the case of Shaligram Laminates Pvt. Ltd. vs. CCE, Ahmedabad reported in 2009 (247) E.L.T. 649, wherein it was held that when clearances made by the assessee were reflected in the ER-1 return and the duty liability was never in doubt and as such there was no case of clandestine removal so as to invoke the provisions of Section 11AC of Central Excise Act, penalty under Section 11AC is not called for and that penalty is imposable only under Rule 27. He, accordingly, pleaded that the order recorded by Hon ble Member (Judicial) is the correct order. 28. Shri Pramod Kumar, the learned Jt. CDR, supporting the order recorded by Hon ble Member (Technical), pleaded that this is not a case of ordinary default in failure to discharge the monthly duty liability by the due date, that in this case the appellant company had hoodwinked the Department by presenting cheques to the banks without having sufficient balance which bounced and also by reporting payment in the ER-1 returns by mentioning the cheque numbers while no such payments of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the circumstances of the case only penalty under Rule 27 can be imposed is not correct in view of fraudulent conduct of the appellant company by presenting the cheques in the banks for payment of duty without having sufficient balance in the account and without intimating the fact of dishonouring of the cheques to the Department and also reporting payment of duty in the ER-1 returns without actually presenting the cheques in the bank, that in view of such conduct of the appellant company, Member (Technical) has correctly held that the penalty under Rule 25 of Central Excise Rules, 2002 readwith Section 11AC would be attracted, that looking to the seriousness of the contravention and fraudulent conduct of the appellant, pre-deposit of ₹ 25 lakhs towards penalty has been correctly ordered. He, therefore, pleaded that it is the order recorded by Hon ble Member (Technical), which is correct. 29. I have carefully considered the submissions from both the sides and perused the records. 30. During the forfeiture period, the appellant had paid duty of ₹ 16.70 lakhs through Cenvat credit while in terms of the provisions of Rule 8 (3A) during this period, the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentwise, as in most of such cases, while the defaulting assessee has not paid duty on the goods cleared during a particular month, on the basis of the invoices issued by him his customers would have taken the Cenvat credit resulting in double loss to the Government. In view of this, I agree with the view of Hon ble Member (Technical) that the appellant would be required to pay duty of ₹ 16.70 lakhs through cash and on payment of this amount through cash, they can re-credit the amount of ₹ 16.70 lakhs debited earlier in their Cenvat credit account for payment of duty. 31. As regards the question of penalty, prima facie this is not a case of ordinary default. It is seen that while the appellant company, in the ER-1 returns filed by them, had reported the payment of self assessed duty, 18 cheques for payment of duty amounting to ₹ 34,37,391/- presented by the appellant company to the bank were not honoured due to insufficient balance in his account and in respect of 13 cheques for payment of duty amounting to ₹ 26,26,500/- whose particulars were mentioned in the returns, had never been presented to the bank. The act of dishonouring of 18 cheques of an amo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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