TMI Blog2015 (8) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... duty - Held that:- Appellant paid the duty on clearing each consignment. Substantial portion of the duty, i.e., to the tune of ₹ 7 crores was paid in account current through PLA. However, for payment of small portion of a duty which was in the neighbourhood of ₹ 31 lakhs, the appellant utilised Cenvat Credit Account. It is this payment from Cenvat Credit which has become the bone of contention. The respondent communicated to the appellant that duty through Cenvat during this period, when facility under Rule 173G was withdrawn, is not permissible. Without demur, the appellant complied with the demand of the respondent by paying this portion of duty also through account current. However, this happened in May, 2002. The respondent now took the position that the custom duty of ₹ 31 lakhs was paid belatedly. As it was paid only in May, 2002, on this delayed payment, appellant was liable to pay interest @ 24% p.a. from the period from 19.12.2000 to 20.05.2002. Order-in-Original dated 13.06.2002 passed by the Commissioner affirming the demand in show cause notice has been confirmed by the Tribunal. It is imperative to point out that even the Department accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. 3. After the said orders were passed the appellant started paying duties on consignment basis. During this period the appellant paid around ₹ 7 crores in cash through account current, i.e., PLA. However, the appellant also had credit in their Cenvat Account. A sum of ₹ 31 lakhs (approximately) was utilized from the Cenvat Account for payment of excise duty in the aforesaid period. The authorities took the view that the appellant could not have utilized the credit from the account. The appellant was asked to pay the said sum in cash and the appellant obliged. Since this payment was made later/belatedly, the Commissioner (Excise) issued the show cause notice as to why the interest at the rate of 24% per annum should not be charged for the belated period, i.e., from 19.12.2000 to 20.05.2002. The appellant refuted the aforesaid averment in the show cause notice with the submission that the payment through Cenvat account was also a valid payment. This contention was not accepted by the Commissioner which resulted in Order-in-Original dated 13.06.2002 charging interest for delayed payment at the rate of 24% p.a. for the aforesaid period. The reason given by the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Refund of, and Exemption from Duty'. Rule 9 thereof stipulates time and manner of payment of duty and sub-rule 1 thereof reads as under: Rule 9: Time and manner of payment of Duty:-(1) No excisable goods shall be removed from any place where they are produced, cured, manufactured or any premises appurtenant thereto, which may be specified by (Commissioner) in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until (excise duty leviable thereon is determined and indicated on each application in the proper form or each gate pass, as the case may be, presented to the proper officer at such place and in such manner as is prescribed in these rules or as the Commissioner may require. 8. The next Rule relevant for our purpose is Rule 173G which is textually very long dealing with various aspects. It prescribes the procedure that has to be followed by the assessee for the purpose of discharging his duty/liability in respect of clearances of excisable goods from the place of permission specified under Rule 9 or from a store room or other place, storage approved by the Commissioner under Rule 47. 9. Eschewing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing reasons, namely:- (i) full payment of any one instalment is discharged beyond a period of thirty days from the date on which the instalment was due in a financial year, or (ii) the due date on which full payment of instalments are to be made is violated for the third time in a financial year, whether in succession or otherwise, then the manufacturer shall forfeit the facility to pay the dues in instalments under this sub-rule for a period of two months, starting from the date of communication of an order passed by the proper officer in this regard and during this period the manufacturer shall be required to pay excise duty for each consignment by debit to the account current referred to in clause (b) and in the event of any such failure it will be deemed as if such goods have been cleared without payment of duty and the consequences and penalties as provided in the Central Excise Rules shall follow. 10. Clause (a) of sub-rule (1) permits the fortnight payments of excise duty. Clause (b) mandates maintaining of a current account with the Commissioner and states that duty can be discharged by debiting such current account or by utilizing Cenvat Credit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty through Cenvat Credit Account was not permissible under the provisions of sub-rule (e) of Rule 173G(1) of the Rules. According to the Tribunal, since these were the admitted facts, the interest @24% p.a. which is prescribed for late payment, was rightly claimed by the Department. 13. At the outset, we are compelled to remark that the Tribunal was not correct in observing that merely because the appellant paid the aforesaid portion of duty subsequently in cash, it had accepted the legal position that payment of duty through Cenvat Credit Account was not permissible under the provisions of Rule 173G(1)(e) of the Rules. Whether such a course of action was permissible or not had to be examined in the light of the legal provisions. There is no estoppel against law. Merely because the appellant had yielded to the demand of the Revenue to pay that portion of duty also in cash, would not mean that the appellant was precluded from taking a stand that such mode of payment through Cenvat Credit Account even during the period when facility of payment of duty by instalments had been withdrawn for two months, was permissible. It had taken a specific defence in this behalf and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to consignment basis. That is what is provided in Rule 9 of the Rules which mandates that no excisable goods shall be removed from the place where they are produced, cured or manufactured or any premises pertained thereto, which may be specified by the Commissioner in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until excise duty leviable thereon is determined and indicated on each application in the proper form or each gate pass, as the case may be, presented to the proper officer at such place and in such manner, as may be prescribed in these Rules or as the Commissioner may require. However, Rule 49 gives facility to the assessees to remove the goods without paying the duty immediately but allowing it to pay it on fortnightly basis as provided therein. At the same time, this facility is given to the manufacturer/assessee on the premise that he faithfully pays the duty every fortnight, by specified dates which are stipulated in Rule 173G. In case defaults are committed by the assessee, its consequences are also provided in the said Rule. For certain specified nature of defaults mentioned in Clause (e) of Rule 173 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 18. It is, therefore, that in the case of Eicher Motors Ltd. v. Union of India [1999 (106) E.L.T. 3] this Court said that a credit under the Modvat scheme was as good as tax paid. 18. When we understand the character of Cenvat Credit in the aforesaid manner, the answer to the question posed easily becomes available, namely, even during the period when the facility of payment of excise duty in instalments on fortnightly basis is not available and remains suspended for a period of two years, the only obligation for the assessee is to pay the duty on each clearance and not on deferred basis. At the same time, insofar as manner of duty is concerned, it can be either through account current or Cenvat Credit. 19. We are conscious of the words during this period the manufacturer shall be required to pay excise duty for each consignment by debit to the account current referred to in Clause (b) ... occurring in clause (e). It is on the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty for home consumption. Rule 57-I provides for recovery of credit wrongly availed of or utilised in an irregular manner. It provides for recovery of the duty credit of which was wrongly availed and if the manufacturer has taken the credit by reason of fraud or willful misrepresentation, suppression of facts etc. with the intention to evade payment of duty then he shall, apart from his liability to pay the amount equivalent to the credit, be liable to pay penalty equal to the same amount plus interest under Section 11AA. 21. The Scheme is thus, a self-contained one, dealing with its applicability, eligibility of credit of duty on certain inputs, adjustment to be made on the credit of inputs used in final products, manner of utilisation of inputs, procedure to be followed by the manufacturer, procedure to be followed by the persons who have availed credit issued in invoice and finally provision for recovery of credits wrongly availed and a provision for imposing penalty for violation of the provisions and availing wrong credit. With the introduction of this new scheme, the assessee had the option to pay excise duty by availing credit of the duty paid on inputs provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forfeit the facility to pay the duty in monthly instalments under sub-rule (1) for a period of two months, starting from the date of communication of the order passed by the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in this regard or till such date on which all dues including interest thereof are paid, whichever is later, and during this period notwithstanding anything contained in sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall be required to pay excise duty for each consignment by debit to the account current 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. 24. It is for the first time that a non obstantive clause was added so as to take away the benefit under the Cenvat Credit rules and to utilise the input credit during the operation of the suspended period and requiring any duty by debit to the account current only. Until then, as is already referred to above, merely because rule 173G recognises the payment of duty utilising the Cenvat credit also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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