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TMI Blog2014 (8) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants and initiated proceedings against them, which resulted in passing of the present impugned orders. As the appellants had paid the duty of Rs. 19.50 lakhs from the total duty of Rs. 39.67 lakhs approx. through PLA, Commissioner confirmed the demand of duty of Rs. 20.07 lakhs approx. which was discharged by using the Cenvat credit. He also confirmed the interest and penalty of Rs. 39.67 lakhs was imposed upon them under Section 11AC. 3. After hearing both sides, we find that the Tribunal in number of decisions has held that payment of duty during the period of default from the Cenvat credit account do not result in Revenue loss and the loss to the Revenue would only be in respect of interest. Accordingly, the Tribunal has held that it is the interest which the assessee is required to pay to the department. Similarly, in respect of penalty, various decisions of the Tribunal have held that it is the provisions of Rule 27 which get attracted in such a scenario. Reference is made to the Tribunal's decision in the case of Saurashtra Cement Ltd. vs. CCE, Rajkot reported in [2008 (225) ELT 395 (Tri-Ahmd)] which stand upheld by Hon'ble High Court of Gujarat as reported in 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh CENVAT credit account and remaining amount of duty Rs. 3,19,266/- vide TR-6 Challan dated. 02.12.2008. Moreover, in terms of Rule 8(3A) ibid the assessee was liable to pay the remaining amount of duty of Rs. 3,19,266/- before 05.10.2008 i.e. within thirty days after the due date of 05.09.2008 as per provisions of Sub rule (3A) of Rule 8 of Central Excise Rules, 2002, but the assessee deposited the said duty of Rs. 3,19,266/- without interest on 02.12.2008 for the month of August, 08. Further, on scrutiny of the ER-1 returns for the months of September, 08 to December, 09, it has also been observed that the assessee have paid the Central Excise duty due for the relevant months as detailed hereunder:- S.No. Month Total duty payable in the month Central Excise Duty debited in Cenvat Credit Account though the assessee was not entitled to do so Central Excise Duty paid through cash but not paid on consignment basis as per Rule 8(3A) ibid. Duty paid on Outstanding duty amount required to have been paid through account current 1. 2 3 4 5 6 7 1. Oct.,08 481824 180221 301603 04.03.09 180221 2.- Nov.,08 540346 227506 312840 04.03.09 227506 3. Dec.,08 505547 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise duty in cash alongwith interest. The assessee was liable to pay duty of Rs. 39,67,072/- (Rs.20,07,725/- wrongly utilized Cenvat amount + Rs. 19,59,347/- amount paid in cash) in cash alongwith interest through GAR-Challan/PLA as per details given above, but they deposited only Rs. 19,59,347/- in cash that too without interest and the balance payable amount of Rs. 20,07,725/- alongwith interest leviable thereon, was not deposited through GAR-Challan but was paid through Cenvat credit by wrong utilization of Cenvat credit. Further, the assessee had deposited Rs. 3,19,266/- on 02.12.2008 against payment of duty for the month of Aug. 08 without interest. Out of Rs. 39,67,072/-, the assessee had deposited duty amount of Rs. 19,59,347/- without interest as per details shown above. Further, the assessee had also deposited a lump sum amount vide GAR-7 Challan dated 09.01.2010 amounting to Rs. 33,508/- & dated 12.01.2010 amounting to Rs. 20,000/- total Rs. 53,508/- on account of interest payable on the aforesaid amount. 9. Adjudicating authority accordingly confirmed the demand of Rs. 39,67,072/- to be paid in cash / current account and also imposed penalty equivalent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Ltd. reported in 2010 (260) E.L.T. 71 (Guj.) and came to conclusion that payment of duty through Cenvat credit was right as there was no loss to Govt. but for interest. 3. Issue regarding payment of defaulted duty through Cenvat credit or through Current account has been examined, It is found that matter has also been clarified by Honble Gujarat High Court in the case of Harsh Silk Industries 2013 (288) ELT 74 (Gujrat) where compliance to rule 8 has been held mandatory. Judgment was delivered in respect of erstwhile rule 8(4) but it is squarely applicable in respect of rule 8 (3A). 14. In a recent judgment delivered by Hon'ble High Court of Madras in the case of Unirols Airtex Vs. Assistant Commissioner of Central Excise, Coimbatore reported in 2013 (296) E.L.T. 449 (Mad.) has also taken similar view holding that assessee is liable to pay excise duty in accordance with the Central Excise Rules 2002 with interest for belated period and there is no provision for utilizing Cenvat credit for such belated payment. Para 12 of the judgement declaring law is reproduced for appreciation 12. Rule 8 (3A) categorically states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faults 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 (1) and sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall, pay excise duty for each consignment at the time of removal, without utilizing the CENVAT Credit till the date of assessee pays the outstanding amount of including interest thereon and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow. Rule 8 (3A) clearly stipulates 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 (1) and sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall, pay excise duty for each consignment at the time of removal, without utilizing the CENVAT Credit till the date the assessee pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. Since it has been held that case for imposition of penalty under provisions of rule 25 read with section 11AC is made, it is held that partial deposit of penalty amounting to Rs. 10 lakhs (Rupees ten lakhs) should be made in current account to avail the benefit of partial stay on account of penalty. 20. On deposit of penalty and reversal of payment of defaulted duty amount through Cenvat credit and subsequent payment from PLA, balance amount of penalty shall remain stayed till disposal of the appeal. Order accordingly. Difference of Opinion Whether payment of duty arising out of default in the case of M/s W.H. Wintech Pvt. Ltd. is to be paid through cenvat credit and pre-deposit of penalty is to be restricted to Rs. 5,000/- (Rupees Five Thousand only) as held by Member (Judicial) based on judgment of Honble Gujrat High Court in the case of Saurashtra Chemicals. Or Whether payment of duty arising out of default in the case of M/s W.H. Wintech Pvt. Ltd is to be paid through cash/current account as per provisions of Rule 8 and Rule 8(3A) based on Gujrat High Court Judgment Harash Silk Industries 2013 (288) ELT 74 (Gujrat) and Honble Madras High Court judgment in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed the demand of Rs. 39,67,072/- with interest and also imposed penalty of Rs. 39,67,072/-. 4. The applicants have already paid an amount of Rs. 20,07,725/- in cash during the period in default. The applicant filed appeal before the Commissioner (Appeals). The same was dismissed. 5. The contention of the applicant is that during the period in default, the applicants were regularly making payment of duty by utilizing the credit of duty paid on inputs. As the applicant already paid the duty though by utilizing the Cenvat credit, therefore, the demand in respect of the service is not sustainable. The applicants relied upon the decision of the Tribunal in the case of Meenakshi Associates vs. .C.C.E., Noida reported in 2013 (295) ELT 578 (Tri-Del.) and in the case of Commissioner of C.Ex and Customs vs. Saurashtra Cement Ltd. 2010 (260) ELT 71 (Guj.). In these circumstances, the contention is that the appeal be heard without asking for any pre-deposit. 6. Revenue after relying upon the decisions of Hon'ble Madras High Court in the case of Unirols Airtex vs. Assistant Commissioner of Central Excise, Coimbatore reported in 2013 (296) ELT 449 (Mad.) and Hon'ble Gujarat High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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