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TMI Blog2015 (10) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... d Paranjape, Adv For the Respondent : Shri Hitesh Shah, Comm (AR) ORDER Per Raju 1. The appellants are an LTU engaged in the manufacture of shaving systems and safety razor blades. They have six factories, located at among other places, in Thane and Hyderabad. The factory at Thane failed to pay a part of the duty amounting to ₹ 1,92,64,263/- in the month of January 2013. Thereafter they paid Central Excise duty in cash on each clearance after 7 th of March 2013. In the month of March 2013 the request of the appellant's to get all the factories centrally registered as LTU was approved. As a result CENVAT credit available in various factories was combined into one account. Large amount of credit available in the Hyderabad factory became available for payment of duty in Thane factory. The appellants deposited the short payment of duty of their Thane unit, that is an amount of ₹ 1,92,64,293/- through their common LTU CENVAT account on 26/03/2013. They paid the interest of ₹ 4,56,009/- in cash. The revenue was of the view that the reversal of the credit made in the CENVAT account in the month of March was not a proper payment of duty and hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. So payments made through Cenvat credit during the defaulting period also becomes good payment once the default is made good by paying the defaulted amount along with interest. Interest on deemed non-payment of duty on clearances during the period of default is a separate consequence but not critical in deciding whether the assesses continues to be in default. 4. The appellants also relied upon the decision of Tribunal in case of Neesa infrastructure 2015 (321) ELT 328. They also relied on the decision of Hon'ble Gujarat High Court decision in case of Indsur Global Ltd 2014 (310) ELT 833 wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayaswal Neco -Civil Appeal No. 1468 of 2004, Civil Appeal No. 7386 of 2005 Hon Supreme Court has observed as under: 22. This provision came up for interpretation before at least four High Courts and all these Courts took the view that even when the facility is withdrawn for making payment in instalments, the excise duty can be paid through Cenvat Credit. It is not necessary to refer to all these judgments. Suffice it is to make a mention of the decision dated 26.10.2005 in C.E.Appeal No. 22 of 2005 rendered by Kerala High Court in Thanikkudam Bagawati Mills Limited, Thanikkudam v. The Commissioner of Central Excise, Calicut. In this judgment, the High Court after analysing the Rules as well as the provisions of Modvat scheme summed up the position as under: 23. It is true that as per rule 173G (1)(b) also the payment utilising Cenvat credit is an approved manner of payment of duty by these rules. It is equally true that even in the absence of such a provision contained in Rule 173G (1)(b) accepting the mode of payment utilising Cenvat credit, an assessee, even by virtue of the provisions contained under Rule 49 read with Rule 57A, will be entitled to utilise such input cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f duty utilising the Cenvat credit also and providing for payment of duty through open and current account only during the suspended period will not have the effect of taking away the benefit conferred by a separate rule since even without Rule 173G by virtue of Rule 49 read with Rule 57A a right has already conferred on the assessee to utilise the input credit for payment of duty at the time of discharging his liability to pay duty on the final product as provided for in the rules. 23. Not only we are in agreement with the aforesaid view taken by the High Courts, it is imperative to point out that even the Department accepted the aforesaid opinion of the High Courts. For this reason, judgments rendered by the High Courts were not challenged and instead to remedy the situation, Rule 8 of the Central Excise Rules, 2002 itself is amended by inserting sub-rule 3A vide Notification No. 17/05-C.E.(N.T.) dated 31.03.2005 w.e.f. 01.04.2005. This Rule now specifically provides that in case of default in making payment of duty, the assessee shall be required to pay excise duty for each consignment by debit to the account current and not by utilising Cenvat Credit. This also lends cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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