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TMI Blog2013 (4) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... in the month of August 2010. They had Cenvat credit balance of Rs. 647/- only at the end of the month of August, 2010. Thus, by availing the excess Cenvat credit of Rs. 25,063/- they had short paid the duty in the month of August 2010 amounting to Rs. 24,416/-. From the ER-1 return for the month of May 2011, it was observed that they had reversed the amount of Rs. 25,063/- vide RG-23A Part-II Entry No. 59, dated 30-5-2011 for the excess availed Cenvat credit in the month of August, 2010 deliberately overlooking the default already committed due to non-sufficiency of credit balance at the relevant time. They had also paid the interest amounting to Rs. 3,424/- vide GAR-7 Challan No. 275, dt. 1-6-2011. However, since they have defaulted in payment of duty they were required to pay the same through Account Current/GAR-7 challan only. The reversal entry in the Cenvat account made by them towards payment of excess Cenvat credit cannot be considered as a payment of defaulted duty for the month of August 2010, in view of provisions of Rule 8(3A) of Central Excise Rules, 2002. Since, the default in payment continued beyond 30 days of due date of payment of duty for the month of August 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Rule 8(3A) of Central Excise Rules, 2002. Accordingly, a show cause notice was issued to them demanding duty consignmentwise for the month of October 2010 to January 2011 (w.e.f. 9th January) February to July 2011 demanding duty of Rs. 61,82,396/- and Rs. 1,52,19,065/- for the period September 2010 to July 2011 vide show cause notice dt. 7th September 2011 and proposing the charging of interest and imposition of penalty on the assessee. The show cause notice was adjudicated vide impugned order in which duty demanded was confirmed and duty already paid was appropriated and penalty was imposed on the assessee. The appellants are in appeal against the said impugned order. 4. The learned Sr. Counsel Shri V. Sridharan appearing for the appellant submitted that the availment of incorrect credit resulted into short payment of duty and therefore the Rule 8(3A) of Central Excise Rules is not invocable. He submitted that the Rule 8(3A) is applicable only in case of default in payment of duty. In the present case there is no default in payment of Central Excise duty by the appellant and there is wrong availment of Cenvat credit not resulting in default in the payment of duty. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from them after May 2011. He submitted that after the show cause notice was issued to them they are paying the duty consignmentwise and without utilizing the Cenvat credit. Therefore, the entire demand upheld in the Order-in-Original has already been paid by them and there cannot be any suppression of fact as there was no intention to evade payment of duty and as such penalty under Section 11AC cannot be imposed on them. Similarly, penalty under Rule 25 of the Central Excise Rules cannot be imposed on them. He, therefore, submitted that the Order-in-Original passed by the learned Commissioner needs to be set aside and their appeal allowed. He relied upon the following case laws. [i] Associated Cement Co. Ltd. v. CTO - 1981 48 STC 466 (SC) [ii] J.K. Synthetics Ltd. v. CTO - 1997 106 STC 1 (SC) [iii] Sanghi Polyesters Ltd. v. Supdt. of C.E. - 2010 (251) E.L.T. 504 (A.P.) [iv] Collector of Central Excise v. Raghuvar (India) Ltd. - 2000 (118) E.L.T. 311 (S.C.) 5. The learned Additional Commissioner (AR) appearing for the Revenue submitted that the contention of the appellant that there was a short paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een taken three times by the appellants. On the basis of examination of ER-1 returns the Superintendent of Central Excise had written to the appellants on 18th January 2011 that the appellants had short paid duty in the month of September and October 2010 and since there is a default of payment of duty as per the provisions of Rule 8(3A) of the Central Excise, they were required to pay the duty w.e.f. 6-11-2010 on consignment basis without utilizing the Cenvat credit and they are also required to pay the applicable interest on the duty. Further the Deputy Commissioner of Central Excise had again written to the appellant on 19th January 2011 to pay the outstanding amount of Rs. 11,44,769/- being duty for the month of September and October 2010 and Rs. 34,90,773/- for the period 25-11-2010 to 8-1-2011 for not paying consignment of duty along with interest failing which the action would be initiated against them under Section 11 of the Central Excise Act read with Rule 8(3) and 8(4) of the Central Excise Rules. The appellants vide letter dt. 27-1-2011 informed the department that they have paid the demand of duty along with interest and in addition they have paid the consignmentwise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey Ltd. v. Commissioner of Central Excise reported in 2011 (263) E.L.T. 663 (Tri.-Del.) and it was held by the Tribunal that the default as mentioned in the Rule 8(3A) of the Central Excise Rules may be short payment of duty or it may be for the total failure to pay the duty and the provisions of Rule 8(3A) will be applicable in either case. The relevant paras of the said decision are reproduced below :- "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 said order. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal or contractual duty". Apparently, therefore, any omission or failure to comply with the obligation relating to payment of duty in the manner prescribed and within the period specified under Rule 8(1) of the said Rules would amount to default in payment of duty. It may be a short payment of duty or it may be total failure to pay the duty." We, therefore, following the decision of this Tribunal are of the view that the default mentioned under Rule 8(3A) of the Central Excise Rules is applicable in short payment of duty also. 9. Appellant relied on the decision of Hon'ble High Court of Andhra Pradesh in the case of Sanghi Polyesters Ltd. v. Superintendent of C. Ex., Hyderabad in support of their contention that provisions of Rule 8(3A) of Central Excise Rules will not be applicable and the Rule 14 of Cenvat Credit Rules should be invoked for recovery of Cenvat credit as mentioned by the Court in para 13 of the order. We find in that case the petitioner purported to pay Excise duty for the month of January 2005 and February 2005 through certain outstation cheques. Those cheques were disnonoured. The amount, which fell due by 5th February 2005 was eventually paid by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default and for recovery of the wrongly availed credit the provisions of Rule 14 of Cenvat Credit Rules, 2004 are attracted. 11. We find that under Rule 8(3A) of the Central Excise Rules if assessee defaults in payment of duty beyond 30 days from due date the assessee shall pay excise duty for each consignment at the time of removal of goods without utilizing Cenvat credit till outstanding amount is paid along with interest. If this is not done then such goods shall be deemed to have been cleared without payment of duty and consequences and penalties as provided in these rules shall follow. For default of August 2010 consignments removed from 6th October 2010 are required to be cleared on payment of duty on each removal in cash or through PLA but this was not done by the appellants. Since goods are deemed to have been cleared without payment of duty, duty is required to be paid through PLA or in cash in the month of October (w.e.f. October 2010) and accordingly, we hold that Revenue is justified in demanding the duty for the month of October 2010 (w.e.f. 6-10-2010) in cash or through PLA along with interest. Accordingly, we uphold the confirmation of demand for the month of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are liable for confiscation and assessee is liable for penalty. We also note that assessee has already paid the consignmentwise duty from 6th November 2010 to 27th January 2011 as pointed out by the Department. Taking into consideration the facts and circumstances of this case, we reduce the penalty imposed by the Commissioner under Rule 25 to Rs. 5,00,000/- (Rupees five lakhs only). 14. Now we come to the finding of the Commissioner regarding the wrong availment of Cenvat credit. Commissioner has confirmed the amount of Rs. 17,20,661/- under Rule 14 of the Cenvat Credit Rules. We find that assessee has taken wrong credit to Rs. 25,063/- in August 2010 and Rs. 11,30,397/- in the month of September/October 2010 as assessee is liable to credit of Rs. 5,65,201/- as per Bill of Entry No. 2199668 dt. 22-9-2010. Under Rule 14 of the Cenvat Credit Rules any credit wrongly taken and utilized is recoverable from the assessee. Therefore, we uphold the confirmation of recovery of Rs. 11,55,460/- along with interest under Rule 14 of the Cenvat Credit Rules. In the facts and circumstances of the case we reduce the penalty imposed by Commissioner under Rule 15 of the Cenvat Credit Rules o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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