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TMI Blog2016 (5) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, 2012 and the default amount had been made good with interest on 4/3/12 where the utilisation of Cenvat credit could be disallowed and the same again demanded in cash along with interest and equal amount of penalty under rule 25 of CCR read with Rule 8 (3A) and section 11 AC of the Act. 2. The brief facts are that on the scrutiny of ER-I Returns for the month of January, 2012 and February, 2012, the appellant had not paid the duty by the due date and some amount was in arrear which was later on paid as follows: Month Amt. of total duty payable in Jan. 2012 Amt. of duty paid from (PLA) on the due date Amt. of duty paid from (CENVAT) on the due date Total amount of duty paid from (PLA+CENVAT) on the due date Amt. of duty not paid on due date i.e. 5th or 6th of the following month Due date of payment of duty alongwith interest Amount of duty paid subsequent to due date Amt. of duty not paid till date 1 2 3 4 5 6 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ld. Counsel for the appellant urges that the issue is no longer res-integra. In the case of Indsur Global Limited Vs. Union of India: 2014 (310) ELT 833 (Guj.). The Honourable Gujarat High Court in the Writ Petition vide its order dated 27/11/2014 have held as follows: 29.This brings us to the last limb of the petitioner's contention, namely, that the condition attached by sub-rule (3A) of Rule 8 is unreasonable and therefore, violative of Article 14 of the Constitution and amounts to serious restriction on the petitioner's right to carry on trade or business of his choice guaranteed under Article 19(1)(g) of the Constitution. This contention requires a closer scrutiny. As noted earlier, the restrictions of sub-rule (3A) come in two folds. Firstly, a defaulter assessee has to clear the consignments on spot payment of excise duty and secondly, that such excise duty has to be paid in cash without availing Cenvat credit. This rule does not make any distinction between the willful defaulter and the others. Though term 'willful defaulter' has not been defined in the statute, the concept is not an unknown one. Section 11AC of the Central Excise Act provides for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty can be manifold and not necessarily in all cases have to be willful default by an assessee despite availability of funds. Excise duty may remain unpaid due to economic reasons, due to slowness in the business or due to financial crunch temporarily felt by the manufacturer who though might have cleared the finished goods and also sold the goods in the market may not have received the payment as promised. All such cases of defaults willful or otherwise are clubbed together for the same treatment and a stringent condition of payment of excise duty without availing Cenvat credit is imposed. It can be appreciated that where a manufacturer falls behind the payment schedule on account of financial constraints, such as, slowing down of business, competition in the market reducing the profit margins, promised payments from the purchasers not coming forth or temporary labour disputes, would find it extremely difficult thereafter to raise further funds for payment of duty in addition to the duty which he has already paid. Cenvat credit is available to a manufacturer upon purchase of inputs which are duty paid. It is the duty element which the assessee has already suffered which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inputs the assessee had already paid the taxes on the basis that when the goods are utilized in the manufacture of further products as inputs thereto then the tax on those goods gets adjusted which are finished subsequently. Thus a right had accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. We may also recall that in the case of Dai Ichi Karkaria Ltd. (supra) it was reiterated that a manufacture obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable produce immediately it makes the requisite declaration and obtains an acknowledgment thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. 32. As held by the Supreme Court in the case of Chantamanrao (supra), the phrase reasonable restriction connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. Legislation which arbitrarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly different angle. With or without the provisions of sub-rule (3A), liability to pay interest for the default period as per sub-rule (3) of Rule 8 continues. Sub-rule (3A) is basically a mechanism for stringent recovery and does not create a new liability unless this mechanism itself is breached. In such a mechanism to provide for withdrawal of CENVAT credit facility for paying the duty amounts to creating a penalty. Insisting on an assessee in default to clear all consignments on payment of duty would be a perfectly legitimate measure. However, to insist that he must pay such duty without utilising CENVAT credit which is nothing but the duty on various inputs already paid by him would be a restriction so harsh and out of proportion to the aim sought to be achieved, the same must be held to be wholly arbitrary and unreasonable. We may recall, the delegated legislature in its wisdom now dismantled this entire mechanism and instead has provided for penalty at the rate of 1% per month on delayed payment of duty. 36. In the result, the condition contained in sub-rule (3A) of Rule 8 for payment of duty without utilizing the Cenvat credit till an assessee pays the outstanding amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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