TMI Blog2014 (3) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... ar dated 28 th March, 2012 will not be applicable in view of reasons stated earlier. We, therefore, hold that the appellants are required to pay an amount of ₹ 8,00,09,346 which is equivalent to the cenvat credit utilized during the period 6.12.2010 to 4.7.2011 in cash. They will, however, be free to take cenvat credit of equivalent amount and utilize it for future clearances. - Demand alongwith interest confirmed - Decided against the assessee. - Appeal No. E/1900/12 & E/85573/13-Mum - Final Order Nos. A/18-19/2014-WZB/C-II(EB) - Dated:- 23-1-2014 - Mr. S S Kang and Mr. P K Jain, JJ. For the Appellant : Shri Prashant Patankar, Consultant For the Respondent: Shri Shobha Ram, Commissioner (A.R.) JUDGEMENT Per: P.K.Jain: The appellants are the manufacturers of printed and laminated plastic films which attracts Central Excise duty. The appellants are paying Central Excise duty and also availing credit of duty paid on inputs under Cenvat Credit Rules, 2004. During the month of October, 2010, they cleared excisable goods, on which, as per self-assessment made by them, duty of Rs.1,51,21,904/- was payable by them. As per Rule 8(1) of the Central Excise R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Rules, 2002, a show-cause notice dated 30.11.2011 was issued to them demanding duty of Rs. 8,00,09,346/- which was equivalent to the amount of Cenvat Credit utilized for clearance of goods during the period 6.12.2010 to 4.7.2011. 3. Another show-cause notice dated 23.7.2012 was issued to them demanding duty of Rs.13,12,25,602/- in respect of the goods cleared during 5.7.2011 to 31.3.2012. The demand was made equivalent to the Cenvat Credit utilized by the appellants during the said period. The said demand was made on the grounds that the appellants have defaulted in payment of Rs.8,00,09,346/- (covered by the first show-cause notice) through cash and therefore the provisions of Rule 8(3A) of Central Excise Rules continues to operate for the subsequent period viz. 5.7.2011 onwards. 4. Heard both sides. The contentions of the ld. counsel for the appellant are as under:- (i) The appellants have paid an amount of Rs.7,92,871/- on 25.11.2010 and therefore there was no default in making the payment; (ii) Even if it is presumed that there was a default, the same has been paid on 5.7.2011 (iii) during the period from 6.12.2010 to 4.6.2011, as per Rule 8(3A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable in respect of arrears of revenue. (vi) With reference to imposition of redemption fine, it was stated that in view of the Larger Bench decision in the case of Shiv Kripa Ispat Pvt. Ltd. vs. CCE C. Nashik - 2009 (213) ELT (Tri-LB), since no goods have been seized or confiscated no redemption fine is imposable. (vii) As far as penalty is concerned, the contention was that the Hon'ble Gujarat High Court in the case of CCE C vs Saurashtra Cement Ltd. - 2010 (260) ELTt 71 (Guj). Has held that no penalty can be imposed under Rule 25 in such circumstances and penalty under Rule 27 only can be imposed. In view of this position, Commissioner's order relating to imposition of penalty under Rule 25 is required to be set aside. 5. Ld. Commissioner (A.R.) on the other hand opposed the contention of the appellants. Ld. A.R. argued that earlier under the Central Excise Rules, duty was required to be paid before removal of the goods. Rules were liberalized and a scheme of fortnightly payment was introduced which was later on made monthly payment of excise duty. As there were large number of instances where various manufacturers defaulted in payment of duty, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default in payment of duty and therefore, the second show-cause notice has been correctly issued. The penalty and fine has been correctly imposed. 6. We have considered rival submissions and have gone through various case laws including that of the Hon'ble Madras High Court and Hon'ble Karnataka High Court as also various decisions of the Tribunal. The admitted fact is that there was default in payment of duty pertaining to the month of October, 2011. First contention of the appellants is that they have made good default by debiting in Cenvat Credit account on 25 th Nov. 2010. This contention of the appellants is rejected in view of first proviso to Rule 3(4) of the Cenvat Credit Rules, 2004. The said proviso reads as Provided that while paying duty of excise or service tax, as the case may be, the CENVAT credit shall be utilized only to the extent such credit is available on the last day of the month or quarter, as the case may be, for payment of duty or tax relating to that month or the quarter, as the case may be . Admittedly, they did not have balance in Cenvat Credit account as on 31 st Oct. 2010 to pay the defaulted amount of Rs.7,92,871/-. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 6.12.2010 to 4.7.2011 are deemed to be cleared without payment of duty, the duty amount will be required to be recovered as arrears of revenue. The question is whether accumulated credit can be used for payment of duty during this period which is otherwise prohibited in view of Rule 8(3A). We note that the Hon'ble High Court of Madras in the case of Unirols Airtex (supra) has observed as under:- Factual Analysis : 7.The petitioner committed default in payment of excise duty. The worksheet produced by the petitioner indicates that the duty was paid belatedly. The petitioner appears to have paid interest on the delayed payment. The worksheet also indicates that the petitioner used Cenvat credit for payment of duty amount. 8.The moot question is whether the petitioner was correct in making use of the Cenvat credit for the purpose of discharging the duty liability. 9.The Central Excise Rules, more precisely, Rules 8 deals with the manner of payment of excise duty. Rule 8(3A) reads thus : 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 6th day of the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority for the proposition that the excise duty can be paid beyond the statutory period by utilising Cenvat credit. There was no positive finding in the said order. The learned Judge directed the Settlement Commission to consider the effect of explanation appended to Rule 8(3A) of the Central Excise Rules, 2002 and to pass orders accordingly. 12. Rule 8(3A) categorically states that the assessee shall pay excise duty for each consignment at the time of removal, without utilising the Cenvat credit till the assessee pays the outstanding amount including interest thereon. The consequence for non-payment of excise duty is also indicated in the very same section as it provided that in case of failure to pay the amount, it shall be deemed that such goods have been cleared without payment of duty and the consequence of penalties as provided in the rules would follow. Rule 8(3A) does not permit the assessee to pay the excise duty by using the Cenvat credit. The provision restrained the assessee from using Cenvat credit till the entire outstanding amount including interest is paid. The explanation is only for the purpose of making the position clear. 13 .There is no questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, hold that the appellants are required to pay an amount of Rs.8,00,09,346 which is equivalent to the cenvat credit utilized during the period 6.12.2010 to 4.7.2011 in cash. They will, however, be free to take cenvat credit of equivalent amount and utilize it for future clearances. Learned Counsel has cited certain judgements of this Tribunal. In view of the above analysis as also the fact that these were delivered before the Hon'ble Madras/Karnataka High Court judgements, we do not consider it necessary to discuss these. 8. The Commissioner's order regarding interest of the first show-cause notice is also upheld. As far as the confiscation and imposition of redemption fine are concerned, in view of the Larger Bench decision in the case of Shiv Kripa Ispat Pvt. (supra), the same is not sustainable and is, therefore, set aside. Similarly, in view of the Hon'ble Gujrat High Court's judgement in the case of Saurashtra Cement Ltd. (supra) penalty under Rule 25 is also not sustainable. 9. As far as the second show-cause notice dated 23.7.12 is concerned, since we have held that non payment of duty as stipulated under Rule 8(3A) during the period December 2010 to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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