9911796707
TMI Blog2016 (8) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutional, therefore, the demand of interest is not sustainable. - Decided in favour of appellant - Appeal No. E/3005/2011 - - - Dated:- 1-1-2016 - Ms. Sulekha Beevi, C.S. Member ( Judicial ) Shri M. Narayana Swamy Naidu, Advocate for the Appellant Sri Venkatesh. AR for the Respondent ORDER [ Order per Sulekha Beevi, C.S. ] 1 The appellant challenges the demand of interest raised on the ground of utilization of Cenvat Credit in contravention of the provision of Rule 8(3A) of the Central Excise Rules, 2002. 2. The appellants are manufacturers of excisable goods viz. Colloidal Graphite and Lubricants. The allegation is that appellants failed to pay the duty within the prescribed due date during the months of Sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved with a show cause notice. It is observed in the impugned order that as the amount was paid through PLA, and there was no further dispute with regard to such payment of duty made through PLA, the original authority is right in not issuing a show cause notice. It is also observed that interest liability being statutory in nature, no separate show cause notice is required. 5. The issue raised in this case being the demand of interest of ₹ 5,61,272/- on account of wrongly utilizing the credit in Cenvat account to pay duty during the defaulted period, I would confine my discussion on the said issue. The learned counsel for appellant submitted that, the said part of sub-rule (3A) of Rule 8 which restricted the use of Cenvat Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on actual payment of duty and secondly that he would not be entitled to avail of Cenvat Credit for such purpose. 35. The situation can be looked at slightly 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 oif CENVAT credit facility for paying the duty borders 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest is unconstitutional and that the subsequent proceedings initiated by the department for demanding tax were set at naught, which were followed by us in a batch of writ petitions in WP Nos. 2506 of 2011 etc.dated 27-03-2015 (M/s Malladi drugs Pharmaceuticals Ltd. RANIPET ETC. Vs Union of India rep. by its Secretary, Ministry of finance etc) deciding the issue in favour of the assesses therein for the reasons stated therein, following the same, this civil miscellaneous appeal is allowed and the substantial questions of law are answered in favour of the assessee and against the Department, Consequently, MP No.1 of 2011 is closed. No costs. 7. In the light of the foregoing judgments, wherein, it is held that the condition contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
