TMI Blog2014 (8) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty which is imposed under Section 11AC, the Hon’ble Gujarat High Court in the case of C.C.E. & Customs vs. Saurashtra Cement Ltd. reported in [2010 (9) TMI 422 - GUJARAT HIGH COURT] held that in such case, the penalty is imposable under Rule 27 of the Central Excise Rules, 2002 which is restricted upto ₹ 5,000/-. In view of the majority order, the appellant is directed to make pre-deposit of ₹ 20,07,725/- (Rupees twenty lakh seven thousand seven hundred twentyfive only) along with deposit of penalty of ₹ 5,000/- (Rupees five thousand only) as a condition of hearing of their appeal - stay granted partly. - Appeal No. 57343 of 2013 - INTERIM ORDER NO. / 803 /2013-EX(BR) & SO/ 51584/2014 - Dated:- 29-4-2014 - Ms. Archana Wadhwa (J) and Mr. Manmohan Singh (T) For the Appellant : Shri B.K. Singh, Advocate For the Respondent : Shri U.K. Sarivastava, DR ORDER Per Archana Wadhwa (for the Bench): The appellants are engaged in the manufacture of PVC profiles and were clearing the same on payment of duty in terms of Rule 8 of Central Excise Rules. The appellants defaulted in payment of duty in terms of said Rule in the month of Oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the earlier orders, we direct the applicant to deposit the interest amount. Learned advocate submits that they have already deposited interest of ₹ 53,000/- approx. and if on calculation by the Revenue, the interest exceeded the said deposited amount, they would deposit the balance and ₹ 5,000/- (Rupees Five thousand only) penalty also within a period of 8 weeks from today. Revenue is directed to quantify the interest and communicate to the appellant within a period of 2- 3 weeks from today. 6. Matter to come up for reporting compliance on 21.11.2013. (Pronounced in the open court) PER: MANMOHAN SINGH 7. I have gone through the draft order recorded by Hon ble Member (Judicial). Facts are given in above order. Member (Judicial) has waived duty and penalty relying upon earlier decision of Tribunal. However order for deposit of interest was ordered with adjustment of earlier deposited interest of ₹ 53,000/. Order for deposit of interest is concurred. However I do not agree with the order relating to payment of defaulted amount of duty through Cenvat account. I also do not agree with the deposit of penalty of ₹ 5,000/- as I am of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 - 254895 5. Feb.,09 528646 255284 273362 26.09.09 255284 6 Mar.,09 589043 164174 424869 26.09.09 164174 7 April, 09 87309 87309 0 - 87309 8. May,09 63862 63862 0 - 63862 9. June,09 75902 75902 0 - 75902 10. July,09 144903 144903 0 - 144903 11. Aug.,09 35960 35960 0 - 35960 12. Sep.,09 274110 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. CE-20(17)WH/Misc/R-II/08/1096 dated 22.01.10 to deposit the Central Excise duty in cash alongwith interest. The assessee was liable to pay duty of ₹ 39,67,072/- (Rs.20,07,725/- wrongly utilized Cenvat amount + ₹ 19,59,347/- amount paid in cash) in cash alongwith interest through GAR-Challan/PLA as per details given above, but they deposited only ₹ 19,59,347/- in cash that too without interest and the balance payable amount of ₹ 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 ₹ 3,19,266/- on 02.12.2008 against payment of duty for the month of Aug. 08 without interest. Out of ₹ 39,67,072/-, the assessee had deposited duty amount of ₹ 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 ₹ 33,508/- dated 12.01.2010 amounting to ₹ 20,000/- total ₹ 53,508/- on account of interest payable on the aforesaid amount. 9. Adjudicating authority accordingly confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court of Gujrat in the case of M/s Saurashtra Cement 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) categori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by due date. 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 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 payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount of duty amounting to ₹ 20,07,725/- paid through Cenvat credit. 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 ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the applicants are required to pay duty through PLA/cash during the period of default until the default is made good. The adjudicating authority confirmed the demand of ₹ 39,67,072/- with interest and also imposed penalty of ₹ 39,67,072/-. 4. The applicants have already paid an amount of ₹ 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 Madra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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