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TMI Blog2015 (9) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... . We accordingly, direct the Revenue to quantify the interest amount and appellant to deposit the same within a period of 8 weeks from the date of quantification of interest amount is informed to the appellant. 3. As regards payment of an amount of Rs. 16.70 lakhs, revenues objection was to the effect that Rs. 16.70 lakhs stand deposited from the Cenvat credit whereas the same was required to be deposited from cash, is not found favour with inasmuch as there are decisions of the Division Benches in the case of Solar Chemferts Pvt. Ltd. and Baba Vishkarma Engg. Co (P) Ltd. wherein it has been held that deposit through Cenvat credit during the period of default would only result in confirmation of interest to the Revenue that is the only loss to the Revenue. As such, we accept the deposit made through Cenvat credit as the deposits towards duty and held that entire duty stand paid by the appellant. 4. Further, we find that admittedly violation of provisions of Rule 8 attract penal provisions in terms of Rule 27 of the Central Excise Rules, in view of the order of Hon'ble Gujarat High Court in the case of CCE vs. Saurashtra Cement Ltd. reported as [2010 (260) ELT 71 (Guj)]. We accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee clearly indicates that the notice kept the Department in dark by declaring the central excise duty payment in their monthly ER-1 returns but the same was not actually paid by them. Further security of ER-1 returns and subsequent enquiry revealed that the noticee has enclosed bogus counterfoils of the cheques having stamp of Punjab National Bank branch. However, the fact is that the said cheques were never presented to the Bank. Thus, the said acts of notice despite having full knowledge that they were not having sufficient funds in their Bank account appear to be deliberate and also to mislead and deceive the department." Default in payment of central excise duty in cash a through account current. 10. It is seen from SCN that M/s BAL has defaulted in payment of duty due for the mouths beginning from March 2008, April 2008, May 2008, June 2008, July2008, August 2008, Sept 2008, Oct 2008, Nov 2008, Dec 2008. In case of default, provision of Rule 8(3A) of central excise rule 2002 are applicable once default exceeds stipulate time limit of 30 days. Table B given below clearly brings out position:- Table B Month Amt. of duty payable Amt. of duty paid form Cenvat Credit A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund 6. August'08 04.08.08 079928 206000.00 Cheque was not presented to the bank 7. 07.08.08 079930 92700.00 Cheques returned due to insufficient fund 8. 09.08.08 079931 46350.00 9. 12.08.08 079932 257500.00 10. 14.08.08 079933 206000.00 11. 19.08.08 079935 92700.00 12. 19.08.08 079936 103000.00 13. 22.08.08 079937 206000.00 14. 26.08.08 079938 103000.00 15. 28.08.08 079939 206000.00 16. Sept.'08 04.09.08 079940 206000.00 08.09.08 Cheques returned due to insufficient fund 17. 09.09.08 079941 206000.00 20.09.08 18. 12.09.08 079944 206000.00 15.09.08 19. 18.09.08 079945 206000.00 Cheques not presented to the Bank 20. 23.09.08 079946 309000.00 21. 27.09.08 079947 309000.00 22. Oct'08 11.10.08 079949 206000.00 Cheques not presented to the Bank 23. 13.10.08 079950 206000.00 24. 18.10.08 079951 206000.00 25. 22.10.08 079952 206000.00 26. 25.10.08 Cheque dated: 25.10.08 of IDBI Bank 206000.00 27. Nov'08 01.11.08 009654 51500.00 Cheques not presented to the Bank 28. 08.11.08 009659 103000.00 29. 10.11.08 009660 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 8 (3A) categorically states that the assessee shall pay excise duty for each consignment at the time of removal, without utilizing the Cenvat credit till the assessee pays the outstading amount including interest thereon. The consequence for non-payment of excise duty is also indicated in the very same section as it provided that in case of failure to pay the amount, it shall be deemed that such goods have been cleared without payment of duty and the consequence of penalties as provided in the rules would follow. Rule 8(3A) does not permit the assessee to pay the excise duty by using the Cenvat credit. The provision retrained the assessee from using Cenvat credit till the entire outstanding amount including interest is paid. The explanation is only for the purpose of making the position clear." 16. In view of above, I am of the firm view that deposited amount in Cenvat credit is required to paid through cash or current account along with leviable interest. Issue regarding penalty under rule 25 or rule 27 17. It is observed from draft order that penalty under rule 27 has been proposed. However, as facts stated above, this is not simple question of default where duty is later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Saurashtra Chemicals. Or Whether payment of duty arising out of default, 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 Hon'ble Madras High Court judgment in the case of Urirols Airtex Vs. Assistant Commissioner Coimbator 2013 (296) ELT 449 (Mad.) and in view of mis-presentation and fraud, pre deposit of Rs. 25 lakhs is to be directed as held by Member (Technical) Sd/- &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2008 and for this purpose he wrote to the Branch Manager, Punjab National Bank, Ambala Road, Saharanpur, where the duty had been paid, for verification about the validity or genuineness of the cheques deposited by the appellant against their duty liability and also report as to whether or the amounts mentioned in the cheques had actually been credited to the Government account. The Branch Manager of the said bank vide his letter dated 29/12/08 informed that out of 32 cheques presented by the appellant for payment of duty only, one cheque of Rs. 92,700/- had been credited to the Government account, whereas 18 cheques for a total amount of Rs. 34,37,391/- were returned as not honoured due to insufficient balance. In respect of the remaining 13 cheques for total amount of Rs. 26,26,500/-, the Branch Manager reported that the same were never presented by the appellant to the bank. The details of the cheques which were not honoured and returned due to insufficient balance in the appellant's account and the details of the cheques which according to the bank were not presented at all are given in para 1.4 of the impugned order-in-original passed by the Commissioner. It was also noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lik for - (a) demand of Central Excise duty amounting to Rs. 88,80,952/- alongwith interest thereon under Section 11AB of the Central Excise Act, 1944 readwith Rule 8 (3) of Central Excise Rules, 2002 ; (b) appropriation of an amount of Rs. 32,71,166/- already paid by the appellant before the issue of show cause notice against their duty liability of Rs. 88,80,952/- ; and (c) imposition of penalty on the appellant company under Rule 25 of the Central Excise Rules, 2002 readwith Section 11AC of Central Excise Act, 1944 and on Shri Feroz Malik, Shri S.K. Jain and Shri Vikas Mehta, Director of the appellant company under Rule 26 of the Central Excise Rules, 2002. 23. The above show cause notice was adjudicated by the Commissioner vide order-in-original dated 30/11/12 by which (a) the Commissioner confirmed the above-mentioned duty demand of Rs. 88,80,952/- against the appellant company under Rule 8 (3A) of Central Excise Rules, 2002 readwith proviso to Section 11A (1) of Central Excise Act, 1944 alongwith interest thereon under Section 11AB ibid and also ordered appropriation of the amount of Rs. 32,71,166/- already paid by the appellant; (b) imposed penalty of Rs. 88, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (3A) based on Hon'ble Gujarat High Court judgment in the case of CCE vs. Harish Silk Industries - 2013 (288) E.L.T. 74 (Guj.) and Hon'ble Madras High Court judgment in the case of Unirols Airtex vs. Assistant Commr. of C. Ex., Coimbatore - 2013 (296) E.L.T. 449 (Mad.) and in view of mis-representation and fraud pre-deposit of Rs. 25,00,000/- is to be directed, as held by Member (Technical)." 26. Heard both the sides in respect of the point of difference. 27. Shri Alok Arora, Advocate, the learned Counsel for the appellant, pleaded that in view of the judgment of the Tribunal in the case of Baba Viswakarma Engg. Co. (P) Ltd. vs. CCE, Ghaziabad reported in 2012 (278) E.L.T. 68 (Tri. - Del.) and Solar Chemferts Pvt. Ltd. vs. CCE, Thane - I reported in 2012 (276) E.L.T. 273 (Tri. - Mumbai), once the defaulted amount has been paid, the payment of duty earlier made through Cenvat credit becomes proper payment even if it was paid before the date on which the defaulted amount is paid, that in view of this, it is not necessary to ask the assessee to pay duty in cash which had earlier been paid through Cenvat credit and take credit of the equivalent amount debited in the Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified, that in this case, the failure to discharge the monthly duty liability by the due date had continued beyond the period of one month from the due date and, therefore, the appellant after expiry of one month from the due date had forfeited the facility to pay duty on monthly basis and by utilising through Cenvat credit and that during such forfeiture period, appellant company was required to discharge duty liability only through PLA, that in view of this, even if during the forfeiture period the appellant had paid duty through Cenvat credit, the same would be required to paid through cash, that in this regard he relies upon the Hon'ble Gujarat High Court in the case of CCE vs. Harish Silk Industries reported in 2013 (288) E.L.T. 74 (Guj.) and Hon'ble Madras High Court's judgment in the case of Unirols Airtex vs. Assistant Commr. of C. Ex., Coimbatore reported in 2013 (296) E.L.T. 449 (Mad.), wherein Hon'ble High Court has held that the requirement of Rule 8 (3A) operates notwithstanding anything contained in sub-Rule (1) and sub-Rule (4) of the Rule 3 of Cenvat Credit Rules, 2004 and when failure to discharge duty liability for a particular month continues beyond a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. However, the appellant during forfeiture period have paid duty of Rs. 16.70 lakhs through Cenvat credit. Though the Tribunal in the cases of Baba Viswakarma Engg. Co. (P) Ltd. vs. CCE, Ghaziabad (supra) and Solar Chemferts Pvt. Ltd. vs. CCE, Thane - I (supra) and also in the case of Meenakshi Associates vs. CCE, Noida reported in 2013 (295) E.L.T. 578 (Tri. - Del.) has held that once the defaulted amount of duty has been paid, the payment of duty through Cenvat credit during forfeiture period become good payment and there is no requirement to pay the duty earlier paid through Cenvat credit, through cash once again, Hon'ble Gujarat High Court in the case of CCE vs. Harish Silk Industries (supra) and Hon'ble Madras High Court judgment in the case of Unirols Airtex vs. Assistant Commr. of C. Ex., Coimbatore (supra) has held in clear terms that during forfeiture period i.e. during the period of default beyond 30 days from the due date, the duty is required to be paid through PLA without utilising the Cenvat credit. This issue was also discussed in the case of Sne India Pvt. Ltd. vs. CCE, Delhi - II reported in 2014 (305) E.L.T. 161, wherein the Tribunal by majority decision dec ..... 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