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TMI Blog2012 (6) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... hly basis before the 5th of the next month and filing ER-1 returns. The dispute in the present appeal relates to the period June 2006 to March, 2008. 3. Before stating the facts, it is proper to record the relevant Rule which is re-produced below: "RULE 8. Manner of payment. - (1) The duty on the goods removed from the factory or the warehouse during a month shall be paid by the 5th day of the following month: Provided that in case of goods removed during the month of March, the duty shall be paid by 31st day of March. Provided further that where an assessee is availing of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during a calendar month shall be paid by the 15th day of the following month except in case of goods removed during the month of March for which the duty shall be paid by the 31st day of March." "(3) If the assesse fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under section 11AB of the Act on the outstanding amount, for the period starting with the first day af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to pay excise duty for each consignment at the time of removal without utilizing cenvat credit until the date of outstanding amount including interest due thereon be paid by them. In terms of provisons of Rule 8(3A), all such removals are deem to made without payment of duty so central excise duty of Rs.1,28,96,280/- involved on such removals during the period June 2006 to March 2007 and of Rs.1,55,72,295/- involved on such removals during the period April 2007 to March 2008 appeared demandable under Section 11A read with Rule 8(3A) along with interest under Section 11AB of the said Act. As the party deliberately contravened the provisions of Rule 4,6,8 of the said rules with intent to evade payment of duty in as much as they did not consciously discharged duty liability in the manner as provided in the said rules, they rendered themselves liable for penal action under Rule 25 of the said rules read with Section 11AC of the said Act. The Central excise duty so demandable from the party is as per Annexure A and Annexure B annexed to said notices. Accordingly, vide two different show cause notices dated 3.7.07 and 6.5.08, it was alleged: i) Demand of Central Excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly remained unpaid which was paid only on 22.1.09. Interest thereon of Rs.14,110/- was also paid on 26.12.06. v) The next default was in January 2007 which was liquidated within 8 days of expiry of the amnesty period i.e. on 13.3.07. However, there were no clearances effected by the appellant during this extra period of 5.3.07 to 13.3.07. vi) No default in paying duty beyond the amnesty period, occurred after January 2007. In fact, the only late duty payment, thereafter, was for the month of April, 2007 in which the short paid duty was paid within the amnesty period on 4.6.07. 6. The Show cause notices were confirmed vide order dated 27-08-2008. When the order was appealed against, the Tribunal remitted the matter for de-novo adjudication vide order dated 19-01-2009 since that order was passed without complying with principles of natural justice. The de-novo adjudication is now done vide the impugned order. The impugned order confirmed the demands for Rs.1,28,96,280 and 1,55,72,295 along with appropriate interest and also imposed penalty of Rs.1,28,96,280 and Rs.1,55,72,295 under 11AC of the Central Excise Act apart from appropriating some deposits made by the appellants towa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw materials used in the manufacture of goods during the impugned period apparently because once this issue is dealt with the demand made collapses. It is only because of such calculated silence that the demand from the impugned order are disproportionately high considering the manufacturing activity done by the appellants during the said period, the payments made through PLA and the credit available to them. The Appellants submit that there was some default on their part which was declared to the department through monthly returns and they have paid penalties by way of interest for the defaulting period. If it all any further penalty is payable it cannot be equal to the duty which they have already paid. They argue that provisions of section 11AC of the Act is not applicable for the situation because they had no intention to evade payment of duty but they had declared the duty liability and there was only delay in payment of duty and that cannot be equated with duty evaded maliciously. 10. In reply the Ld Authorized Representative for Revenue did not press the argument that the delay in payment of the differential interest due to calculation mistake can bring the assessee within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to the C. E. rules and not to the Cenvat Credit Rules, 2004. The deeming fiction will apply only for applying penal consequences under Central Excise Rules 2002. The major consequence is that such goods would have been liable to seizure and confiscation under Rule 25 of C. E. Rules. In fact Rule 8(3A) is drafted to enable this as a means to compel the assesse to pay his declared dues promptly by the due date or at least within thirty days thereafter. Revenue has not chosen to use this deterrent of seizure and confiscation but has chosen to fasten huge liabilities through Show Cause Notices issued after considerable period of time. Once seizure is not adopted as a coercive measure for the impugned situation, the only other penal consequences that the Revenue can enforce are interest and penalties as per C. E. Rules and not denial of taking of Cenvat credit available under Cenvat Credit Rules 2004. The argument that the appellants collected the duty from customers but did not remit it to government is not quite appropriate because the Rules are made knowing fully well that the situations under Rule 8, and not just under Rule 8 (3A) are of that nature. Further even if assessee do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt is made good along with appropriate interest on defaulted amount and normal situation is restored. So payments made through Cenvat credit during the defaulting period also becomes good payment once the default is made good by paying the defaulted amount along with interest. Interest on deemed non-payment of duty on clearances during the period of default is a separate consequence but not critical in deciding whether the assesses continues to be in default. 17. Now the issue to be decided is the quantum of penalty that is to be paid by the appellant. The argument that section 11AC will not apply to the situation is trite as the assessee himself declares the default while filing the return and there is no suppression in the matter. The only question that can arise is whether penalty under Rule 25 or Rule 26 or Rule 27 will apply in this case. In view of the decision of Gujarat High Court in the case of CCE Vs. Saurashtra Cement Ltd-2010 (260) ELT 71 (Guj) we adopt the view that penalty under Rule 27 is the appropriate penalty and reduce the penalty on the Appellants to Rs.5,000/-. 18. The appeal is thus partially allowed by setting aside the duty demanded and reducing the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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