TaxTMI 
TaxTMI 
2010 (11) TMI 263
X X X X Extracts X X X X
X X X X Extracts X X X X
.... During the scrutiny of ER-1 for the month of July 2007 it was noticed by the department that the appellants had cleared dutiable excisable goods valued at Rs. 1,71,55,430/- on which the duty to the tune of Rs. 27,44,869/-besides education cess of Rs. 54,897/- and higher education cess of Rs. 27,449/- was payable by 5th of August 2007 but the appellants paid an amount of Rs. 25,40,000/- and Rs. 22,000/- from PLA and sum of Rs. 1,77,543/-, Rs. 3,551/- and Rs. 1,775/- from the Cenvat account towards the basic duty, education cess and higher education cess respectively. Consequently, there was short payment of Rs. 67,326/-, Rs. 11,346/- and Rs. 3,674/- towards basic duty, education cess and higher education cess respectively. On being pointed out the same to the appellants, they later submitted revised ER-1 return for the month of July 2007 alongwith their letter dated 28th November 2007 disclosing corrected quantity of clearance in respect of Tea/Coffee Premix/and Enerzai Drinks and thereby total value of clearances for the month of July 2007 was sought to be reduced to Rs. 1,66,55,756/- instead of original amount disclosed to the tune of Rs. 1,71,55,430/- and thereby the appellants ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....edly in the case of appellants there was no such default. Default merely related to two or three days for each of the months and that too it had inadvertently remained to be cleared on account of the procedure which the appellants was following pursuant to the contractual arrangements between the appellants and principal. According to the appellants, the agreement between the appellants and their principals required to submit the detail account to the principals by the last Friday of every month. Occasionally the appellants failed to take into consideration two or three days of every month which fell beyond the last Friday of every month. However, there was no intentional avoidance by payment of duty. In such circumstances, the drastic consequences contemplated under sub-rule (3A) of Rule 8 could not have been invoked as the same could have drastic effects on the industries. Besides, there are other provisions like 11AC to take care of such situations. According to the learned advocate therefore the authority below erred in imposing penalty under sub-rule (3A) of Rule 8 of the said Rules. 5. He further submitted that in the case in hand, the respondents have shown undue haste....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce with provisions of law and not otherwise. 7. The learned advocate for the appellants in rejoinder submitted that the decision of the Bombay High Court was in relation to the provisions of the law comprised under Rule 8 as it existed prior to 2006 wherein there was specific provision that in the case of three successive defaults irrespective of number of days for default the penal provisions was to be attracted. It was also sought to be contended that the judgment of the Gujarat High Court was on the vires of the provisions relating to the Cenvat credit. He also reiterated the submission that the default cannot be equated with the short payment. 8. The Commissioner after taking into consideration the entire materials on record and the rival contentions has held that for default in duty, the consequences and penalties specified in the Rules alone shall be invoked and considering the system which was adopted by the appellants for calculating the duty liability up to the last working Friday of every month during the relevant period was admittedly incorrect as there was short payment of duty. In other words and as was fairly submitted by the learned advocate for the appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the duty on the goods removed from the factory or the warehouse during a month shall be paid by the 6th day of the following month, if the duty is paid electronically through internet banking and by the 5th day of the following month, in any other case, provided that in case of goods removed during the month of March, the duty shall be paid by the 31st day of March. The second proviso relates to the situation where there is exemption available to a person under a notification. The explanation to the said rule provides that the duty liability shall be deemed to have been discharged only if the amount payable is credited to the account of the Central Government by the specified date and if the assessee deposits the duty by cheque, the date of presentation of the cheque in the bank designated by the Central Board of Excise and Customs for that purpose shall be deemed to be the date on which the duty has been paid subject to realization of that cheque. 13. Sub-rule (3A) of Rule 8 of the said rules provides that if the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring in mind this basic principal of law and applying the same to the provision of law in hand which apparently disclose not only the manner of payment of duty but also prescribes the period by which the same has to be paid, prescribes the circumstances in which the obligation thereunder would stand discharged and also prescribes the consequences which would follow in case of non-compliance of such obligation in the manner prescribed, in our opinion, by no stretch of imagination it can be held to be either optional or could be interpreted in such a manner that would result in altering the consequences contemplated under those provisions. 19. It was strenuously argued on behalf of the appellants that the expression "defaults" used in sub-rule (3A) would disclose that the said Rule would not be attracted in the case of mere short payment. It is only when there is a total default in payment of duty in the manner stated under sub-rule (1) then only the provisions of sub-rule (3A) would be attracted. Heavy reliance is sought to be placed in the decision of the Tribunal in the matter of Deepak Silicate (P) Ltd. (supra) in that regard while drawing our attention to para '5' of the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uty. No such law has been laid down under the said decision nor it can be even inferred besides that every sentence in an order cannot be read as a statute and the law in that regard is well settled. 21. It is true that word "default" is not found in sub-rule (1). However, merely because the said word is not found in sub-rule (1) that cannot be a justification to arrive at a conclusion that the provisions of sub-rule (3A) would not be attracted inspite of non-compliance of sub-rule (1). There could be no occasion to use the word "default" in sub-rule (1) as sub-rule (1) essentially deals with the subject of the manner of payment and the period within which it is required to be paid. The provision for the consequences of default can be found only when the rule making authority deals with the consequences of failure to comply with the obligation regarding the payment of duty. Obviously, therefore, there could be no occasion to use the word "default" in sub-rule (1). 22. It is also pertinent to note that there is no expression "short payment" or "less payment" used in sub-rule (1) and rightly so because question of considering whether there is short payment or less payment....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... interpretation of a statutory provision. Besides, the contention regarding hardship is also without any substance. Undisputedly while imposing the penalty, the provisions of Section 11AC would be attracted. The said provision of law takes abundant care to ensure that the imposition of penalty would not be without consideration of the circumstances under which the default is committed. The provision regarding 100% duty liability can arise only when there is intentional evasion of duty. Being so, in case the assessee is able to establish its bona fide, certainly the assessee would get necessary relief in that regard. 26. The Bombay High Court in Vidushi Wires Pvt. Ltd. case while dealing with Rule 8 of the Central Excise Rules, 2001 had held that "it would be clear that non-compliance of rule in question is made penal. It, therefore, has to be treated as mandatory". The observation of the Bombay High Court that the rule is mandatory is not based on the provisions regarding the manner in which the duty liability was required to be discharged but on the basis that the failure to comply with the obligation would result in imposition of penalty. In other words, there having been p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of an order passed by the proper officer in this regard and during this period the manufacturer shall be required to pay excise duty for each consignment by debit to the account current referred to in Clause (b) and in the 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 follow." 30. As already stated above, a provision of law has to be understood primarily by the grammatical meaning of the word used in the provision. The occasion to consider the intention of the law makers can arise only in case where the interpretation of any ambiguous statutory provision is called for. Even otherwise to accept the argument sought to be canvassed on behalf of the appellants and if we read the provisions of law as it stands and compare the same with the erstwhile provision of law pointed out by the learned advocate for the appellants, it would clearly disclose the intention of law makers to make the provisions more stringent. Very fact that the facility of payment in instalments is done away with and apart from providing that the duty liability has to be....