9911796707
TMI Blog2007 (7) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... sue stands answered in the negative, and in favour of the assessees, by the decision of the Hon'ble Kerala High Court in the case of Thanikkudam Bhagawati Mills Ltd. v. CCE, Calicut in Central Excise Appeal No. 22 of 2005 by the judgment dated 26-10-2005, holding that an assessee is eligible to avail the benefit of Rule 3 of the Cenvat Credit Rules for discharging duty on consignment basis after default and consequent forfeiture of facility of payment of duty on fortnightly basis, under Rule 173G(e). The relevant extracts from the judgment are reproduced herein below :- "11. The point in controversy is as to whether the assessee who avails the benefit of a deferred payment system in the matter of payment of excise duty as provided fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder rule 47 during the first fortnight of the month, by the 20th day of that month, during the second fortnight of the month, other than the month of March, by the 5th day of the succeeding month and so on. Immediately, we may notice that dehors Rule 173G even as per Rule 49 the manufacturer other than a manufacturer who avails such exemption is entitled to discharge his duty liability in respect of clearance of excisable goods made during the first fortnight of the month by the 20th day of that month and so on. Thus, both Rule 49 as well as rule 173G to this extent is pari materia same which permits payment of duty to be made by the 20th day of the month in respect of clearance of excisable goods made during the first fortnight and by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or otherwise, then the manufacturer shall forfeit the facility to pay the dues in installments under this sub-rule for a period of two months starting from the date of communication of an order passed by the proper officer in this regard or till such date on which all the dues are paid, whichever is later and during this period the manufacturer is liable to pay excise duty for each consignment by debit to the account current referred to in clause (b) and in any event of any such failure it will be deemed as if such goods have been cleared without payment of duty and the consequences and penalties as provided in the Central Excise Rules shall be followed. The contention of the Revenue is that by virtue of the provisions contained in Rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of utilising the input credit will become unworkable and ineffective. It has to be noticed as rightly pointed by the counsel appearing for the petitioner that the rule making authority took notice of this lacuna and by the Central Excise Rules, 2002 - second amendment 2005, which came into force from 1st April, 2005, the Central Excise Rules, 2002 was amended and Rule 3A was inserted which reads as follows : "If the assessee defaults in payment of duty by the date prescribed in sub-rule (2) and the same is discharged beyond a period of thirty days from the said date, then the assessee shall forfeit the facility to pay the duty in monthly installments under sub-rule (1) for a period of two months, starting from the date of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty through the open current account by debiting the input credit already utilised (it) will have to be reversed because what is lying in the credit is the amount of duty already paid on the inputs. Hence it has to be found that there is a revenue neutral." 3. It cannot be disputed that the provisions of Rule 8(4) are pari materia with Rule 173G(1)(e) and the non-obstantive clause was introduced by insertion of sub-rule 3A in Rule 8 of the Central Excise Rules, 2002, only w.e.f. 31-3-2005, while the period in dispute in the present case is prior to that date. The ratio of the Kerala High Court's judgment is, therefore, applicable on all fours to the present case and following the same, we hold that during the period of forfeiture of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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