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TMI Blog2019 (6) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Demand under SCN As per OIO As per OIA Paid before issue of SCN and appropriated Interest Penalty 1. Short payment of duty 1643 1643 112 paid and appropriated 1643 Penalty waived - Dept. is not in appeal 2. Irregular availment of CENVAT 114439 114439 0 374040 Penalty waived - Dept. is not in Appeal 3. Irregular availment of CENVAT 117724 117724 0 4. Excess Credit of CENVAT 515917 515917 0 5. Non payment of CENVAT Credit 1203530 1063070 Held as payable 601766 1203530 Demand confirmed Interest confirmed Penalty of 601766 confirmed Total 1719447 1578987 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of demand. He also shows the documents relating to the settlement of their insurance claim which show that although they claimed an amount of Rs. 97,37,301/-, the actual amount sanctioned by the Insurance Company was only Rs. 77,04,467/-. After debiting some amount towards under-insurance they were actually paid an amount of Rs. 55,20,548/- only. He would urge that no demand can be raised only on the basis of their insurance claim, especially when the claim clearly indicates some amount as overhead charges. No CENVAT Credit was, evidently, availed on the overhead charges. Therefore, their appeal may be allowed and the impugned order may be set aside. He fairly submits that before both the lower authorities and the first appellate author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e their final products. If the goods were not destroyed in the cyclone, they would have been able to sell the goods as their final products. In fact, the Insurance claim filed by the appellant was also for their final products. Therefore, duty has to be paid on the final products as per the demand. It is true, that the appellant has reversed the CENVAT Credit on the inputs which have gone to the manufacture of these final products and this amount has been appropriated towards the demand raised. Therefore, there is no infirmity or incorrectness in the impugned order. He prayed that the appeals of the appellant may therefore be rejected. 6. I have considered the arguments on both sides and perused the records. The short question to be decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured. 9. The next question is when should be duty which is payable, to be paid. Rule 8 of the Central Excise Rules 2002 provides that "the duty on goods removed from the factory or Warehouse during a month shall be paid by 6th of the following month, if the duty is paid electronically through internet banking and by 5th of the following month in any other case". From these provisions, it is clear that the levy of duty would be as soon as the goods are manufactured or produced. But the duty becomes payable only if the goods are removed from the factory and the duty so payable has to be paid only by 5th to 6th of next month. 10. If the goods after having been manufactured or produced are destroyed before they are removed from the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that excise duty is chargeable on the activity of manufacture or production. Even though liability for payment of tax has been postponed to the time of removal of goods for the factory, but still the legal liability to pay the excise duty has been fastened on the goods, when it has been manufactured or produced. Therefore, normally all goods manufactured suffer excise duty at the time of removal, but if the manufactured goods are destroyed due to natural causes etc., Rule 21 of Central Excise Rules, 2002, provides for remission of duty. Further, Rule 3(5C) of CENVAT Credit Rules, 2004, also requires reversal of credit on the inputs when the duty is ordered to be remitted under the said Rule 21. Therefore, if the goods have been manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above would apply. However, if the activity carried out on WIP cannot be considered as manufacture of goods, they should be considered as inputs and the CENVAT Credit has to be reversed. What the Board circular does not clarify is under what rule or section the duty becomes payable. There is no doubt that if the goods are manufactured, the duty is leviable but it becomes payable as per Rule 4 only and the payment has to be made by 5th or 6th of the following month. As long as the goods are not removed at all and are lying in the factory, no duty is payable at all, regardless of how long after the manufacture they remain there. If the goods are destroyed, the assessee can claim remission to duty. But, where the goods are destroyed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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