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2015 (9) TMI 351 - KARNATAKA HIGH COURT

2015 (9) TMI 351 - KARNATAKA HIGH COURT - 2015 (325) E.L.T. 529 (Kar.) - Duty demand - Duty paid through debit made in CENVAT Credit account - contravention of the provisions of Rule 8(3) of the Central Excise Rules, 2002 - Held that:- A bare reading of Rule 14 would indicate that where the assessee has taken or utilized wrongly or has been erroneously refunded the CENVAT credit, then authorities would be entitled to recover the same from the manufacturer or the provider of the output service an .....

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t of duty or in other words, such belated utilization of CENVAT credit for payment of central excise duty to be construed as one in contravention of sub-rule (3A) of Rule 8 - Court is of the view that impugned notices cannot be sustained as it is contrary to Rule 14 of CENVAT Credit Rules, 2004, and in violation of natural justice. - Decided in favour of assessee. - Writ Petition No. 1438/2015 (T-TAR), W. P. No. 13104/2015 - Dated:- 22-4-2015 - Aravind Kumar, J. For the Appellant : Sri H Y Raju .....

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ation of Rule 8(3A) of Central Excise Rules, 2002. FACTUAL MATRIX: Re.W.P.No.1438/2015: 4. Petitioner had filed quarterly returns in ER.3 indicating the value of clearance, central excise duty payable and duty actually paid in cash and what is available by way of debit in the CENVAT credit with the petitioner for the period from January 2011 to March 2011 and indicating the vendor that duty payable was ₹ 6,79,334/- and the duty was shown as having been paid by way of debit in CENVAT credit .....

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of CENVAT Credit Rules, 2004, petitioner is required to pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date petitioner pays the outstanding amount including the interest thereon. As such, it was held that petitioner is deemed to have cleared the goods without payment of duty and thereby the impugned notices came to be issued. Re.W.P.13104/2015: 5. In the quarterly returns ER.1 for the period January 2013 to March 2013 the respondent aut .....

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ulted in payment of duty, namely has paid duty beyond the prescribed 30 days period. As such, revenue contended that petitioner is required to pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the outstanding amount including the interest is paid. It is also indicated in the impugned notices that for the months of May 2014, June 2014 and July 2014 petitioner has utilized CENVAT credit for payment of central excise duty for the respective months .....

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stated that proceedings will be initiated under Section 11 of the Central Excise Act, 1944 to recover the same. Hence, calling in question said notices these two writ petitions have been filed. 6. It is the contention of learned counsel for the petitioners that when either CENVAT credit payment was utilized wrongly or has been erroneously refunded, respondent authorities would be entitled to recover the same after the issuance of notice under Rule 14 of CENVAT Credit Rules, 2004 and without adop .....

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n obtained beyond the prescribed period and when there is violation of subrule (1) or sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004, it is deemed that there is no CENVAT credit having been obtained by the petitioners. As such, sub-rule (3A) of Rule 8 would be attracted and those consignments which had been removed by utilsing CENVAT credit would be treated as consignments having been removed without utilizing CENVAT credit and thereby petitioners would be liable to pay the excise duty by c .....

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thing 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 penalties as provided in these rules shall follow." 9. A perusal of .....

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rwise, such clearance would be deemed as one cleared without payment of duty and the consequence of penalties as prescribed under the Rules would follow. 10. In order to press into service sub-rule (3A), CENVAT Credit Rules, 2004, Rule 14 of CENVAT Credit Rules, 2004 will have to be looked into. It reads as under: "Rule 14: Recovery of CENVAT credit wrongly taken or erroneously refunded. Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, the same al .....

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