TMI Blog2014 (9) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) of Rule 3 of Cenvat Credit Rules, 2004 and when the failure to discharge duty liability for a particular month continues beyond a period of 30 days from the due date, during that period, in accordance with the provisions of Rule 8(3A), duty on the goods cleared would be required to be paid consignment-wise and without utilizing the Cenvat Credit. For the period of default in discharge of monthly duty liability beyond 30 days from the due date, duty on clearances made during the forfeiture period, would be required to be paid through PLA and if the duty had been paid through Cenvat Credit, the same would be required to be paid through PLA by permitting the re-credit of the amount debited in Cenvat Credit amount. Moreover, from the language of Rule 8(3A), it is clear that it is a non obstante provision which operates notwithstanding anything contained in sub-rule (1) & sub-rule (4) of Rule 3 of the Cenvat Credit Rules, 2004 and hence provisions of this sub-rule will have overriding effect over the provisions of the Cenvat Credit Rules, 2004. The total duty paid through Cenvat Credit during the forfeiture period to which the provision of Rule 8(3A) would apply, appears to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .-Ahmd.)]. It stands held by the Tribunal that in case of utilization of credit instead of payment of duty in cash it results in loss to the Revenue only to the extent of interest. To the same effect is the decision of Tribunal in the case of Manipal Springs Ltd. v. Commissioner [2012 (286) E.L.T. 628 (Tribunal)]. As regards penalty, we find that the issue is no more res integra and stands decided by the Gujarat High Court in the case of CCE v. Saurashtra Cement Ltd. reported in 2010 (260) E.L.T. 71 (Guj.) when the appeal filed by the Revenue against the order of the Tribunal was dismissed. The said decision stand followed by the Hon ble Gujarat High Court in subsequent case and by Tribunal in number of matters. 3. The appellant has paid the duty liability through Cenvat credit. Tribunal decision referred (supra) have interpreted the provisions of Rule 8 of Central Excise Rules and has come to a finding that the utilization of Cenvat credit during the period of default results only in interest loss of the Revenue. Similarly as regards penalty, we find that apart from the fact that show cause notice proposed imposition of penalty only under Rule 27 which prescribe maximum pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty consignment-wise through PLA shall be deemed that goods have been cleared without payment of duty and penal consequences shall follow. For ready reference, provisions of Rule 8 are reproduced. Rule 8 of the Central Excise Rules, 2002 (hereinafter referred to as the rules provided that :- (1) The duty on the goods removed from the factory or the warehouse during a month shall be paid by 5th day of the following month : Provided that in case of goods removed during the month of March, the duty shall be paid by the 31st day of March. (2) The duty of excise shall be deemed to have been paid for the purpose of these rules on the excisable goods removed in the manner provided under sub-rule (1) and the credit of such duty allowed, as provided by or under any rule. (3) If the assessee fails to pay the amount of duty by the due date, he shall be liable to pay the outstanding amount along with an 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 after due date till the date of actual payment of the outstanding amount : Provided that the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the goods removed during the month of May-2010, 5th day of July-2010 in respect of the goods removed during the month of June-2010, 5th day of August-2010 in respect of the goods removed during the month of July-2010, 5th day of September-2010 in respect of the goods removed during the month of August-2010, 5th day of October-2010 in respect of goods removed during the month of September-2010, 5th day of November-2010 in respect of goods removed during the month of October-2010, 5th day of December-2010 in respect of goods removed during the month of November-2010 but they have paid duty beyond a period of one month from the due date. Sub-rule (3A) of Rule 8 of Central Excise Rules, 2002 lays : 3(A) - If the assessee fails to pay the amount 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 sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in a financial year, the assessee shall forfeit the facility of payment of dues in instalments for a period of two months from the date of communication of the order passed by the Deputy Collector of Central Excise in this regard or till such date on which all dues are paid, whichever is later. The sub-rule further provides that during such period the assessee shall be required to pay excise duty for each consignment by debit to the account current, failing which it shall be deemed that the goods have been cleared without payment of duty and the consequences and penalties under the rules would follow. Thus, Rule 8 of the Rules contains an inbuilt scheme which gives a facility of payment of Central Excise duty on a fortnightly basis and also provides for the consequences of breach of its provisions. 10. It may be recalled that the respondent-assessee, who was availing of the facility of payment of duty on a fortnightly basis under Rule 8 of the Rules, had defaulted in making payment on account of which, by an order passed by the Deputy Commissioner, the facility of making payment in instalments under sub-rule (1) of Rule 8 came to be withdrawn. The assessee was, therefore, requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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. 10. It is clearly stipulated in Rule 8(3A) that in case of default, assessee shall pay excise duty for each consignment at the time of removal, without utilizing Cenvat Credit. Para 11 of Gujarat High Court also laid down clear law on the issue and it does not leave to interpretation that duty could be paid through Cenvat Credit even though it is mandatorily required, to be paid from current account. Accordingly interpretation held by Tribunal on this account is no more a good law. 11. In view of above, it clearly comes out that demand for payment of duty through [current] account is not legal and proper and was required to be paid through PLA. Accordingly I do not agree with views of learned Member (Judicial) for waiver of defaulted amount paid through Cenvat credit. It is considered necessary that duty paid through Cenvat credit be also paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys, 147 days, 121 days, 90 days and 60 days beyond the due date in discharge of duty liability for May 10, June 10, July 10, Aug. 10 and Sept. 10 respectively. There was delay in discharge of duty liability for April 10, Oct. 10 and Nov. 10 also but the same was for period less than 30 days from the due date. The allegation against the appellant is that during the forfeiture period also, they paid duty by utilizing Cenvat credit instead of paying duty only through PLA. It is on this basis that show cause notice dated 7-3-11 was issued to them asking them to show cause notice as to why the duty of ₹ 7,52,903/- not paid by them by the due date for April 10 to Nov. 10 should not be recovered along with interest, the amount of ₹ 7,52,903/- plus interest of ₹ 21,240/- paid subsequently towards this duty liability should not be appropriated, why the wrongly utilized Cenvat Credit of ₹ 13,39,225/- during April 10 to Dec. 10 should not be recovered along with interest thereon under Section 11AB and why the penalty should not be imposed on the appellant under Rule 27 of the Central Excise Rules. The show cause notice was adjudicated by the Additional Commissioner vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sethi, Advocate, learned counsel for the appellant, pleaded that there was delay in discharge of monthly duty liability for more than 30 days beyond the due date only for the months of May 10, June 10, July 10, Aug. 10 and Sept. 10, that the total duty payable for these months is ₹ 5,40,468/-, that there was delay of more than 30 days beyond the due date in payment of this duty only, that the duty for April 10, Oct. 10 Nov 10 had been paid within 30 days from the due date of 5th of the next month and hence in respect of discharge of duty liability for these months, there is no question of invoking Rule 8(3A), that the duty for April 10, May 10, June 10, July 10, Aug. 10 Sept. 10, Oct. 10 Nov. 10 has already been paid along with interest and this is no longer in dispute, that the dispute is only in respect of May 10 to Sept. 10, when there was delay beyond 30 days from due date in discharge of duty liability and Rule 8(3A) of the Central Excise Rules, 2002 becomes applicable, and the dispute is on the point as to whether the appellant during forfeiture period could pay duty in respect of clearances through Cenvat Credit, that in this regard a Division Bench of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PLA only and could not have utilized Cenvat Credit till the outstanding amount including the interest thereon had been paid and that the same view has been taken by the Tribunal in case of F.S. Engineers v. CCE, Ahmadabad-II reported in 2013 (293) E.L.T. 61 (Tri.-Ahmd.). He, therefore, pleaded that in view of repeated default of the appellant, when default in discharge of monthly duty liability continued beyond the 30 days from the due date, the Hon ble Member (Tech.) has correctly ordered him to pay duty during forfeiture period in cash, after reversing the payment of duty through Cenvat Credit and as such he supports order of the Hon ble Member (Technical). 19. I have considered the submissions from both the sides and perused the records. As mentioned above, there was default in discharge of duty liability by the due date, in respect of April 10, May 10, June 10, July 10, Aug. 10 Sept. 10, Oct. 10 Nov. 10. However, the period of default for April 10, Oct. 10 Nov. 10 is less than 30 days from the due date and the period of forfeiture of facility to discharge duty liability on monthly basis and utilizing Cenvat Credit for discharge of monthly duty liability, under the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods cleared on consignment basis without utilizing the Cenvat Credit. 20. The details on period of delay in discharge of monthly duty liability for the months of April 10, May 10, June 10, July 10, Aug. 10 Sept. 10, Oct. 10 Nov. 10 are given in Annexure-A to the show cause notice. From this Annexure it is clear that the period of default exceeded 30 days from the due date only in respect of May 10, June 10, July 10, Aug. 10 Sept. 10 and it is in respect of the default periods beyond 30 days from the due date that the provision of Rule 8(3A) would be attracted. There is, however, no dispute that duty for these months has been paid through PLA along with interest for the period of delay. Though the Tribunal in case of Baba Vishwakarma Engineering, reported in 2012 (278) E.L.T. 68 (Tri.-Del.) Meenakshi Associates (supra) and Solar Chemferts Pvt. Ltd. reported in 2012 (276) E.L.T. 273 (Tri.-Mum.) has held that once the defaulted amount of duty is paid with interest, the duty payment made through Cenvat Credit during forfeiture period become good payment, even if it is paid before the date on which the default amount has been paid and it is not necessary to ask the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of excise shall also include the amount payable in terms of the Cenvat Credit Rules, 2004, would not amount to a permission of utilizing the Cenvat Credit for paying the excise duty. Rule 8(3A) is very specific when it provided that the entire duty should be paid without utilizing the Cenvat Credit. There is no question of utilizing the explanation for the purpose of using the Cenvat Credit for paying the outstanding duty amount. 15. The law is, therefore, clear that the assessee is liable to pay the excise duty in accordance with the Central Excise Rules, 2002 with interest for the belated period and there is no provision for utilizing the Cenvat Credit for such belated payment. 21. I find that the same view has been taken by Hon ble Gujarat High Court in case of CCE v. Harish Silk Industries, reported in 2013 (288) E.L.T. 74 (Guj.). It is settled law judgment of High Court on a particular issue is binding on the Tribunal. Therefore, notwithstanding the judgments of the Division Bench of the Tribunal in cases of Solar Chemferts Pvt. Ltd. (supra), Meenakshi Associates (supra) Baba Vishwakarma Engineering (supra), I am of prima facie view that in view of the above-me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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