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2015 (10) TMI 965 - CESTAT MUMBAI

2015 (10) TMI 965 - CESTAT MUMBAI - TMI - Waiver of pre deposit - Section 35F - Debit made in CENVAT Credit account - Mandatory pre deposit - Held that:- The entire dispute in the case relates to the incorrectness of the utilisation of the amount used from CENVAT account. The order of the Commissioner clearly does not recognize the payments made through said account and orders payment in cash. In view of the fact that the Rule 8(3A) as well as the order of the Commissioner clearly distinguishing .....

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-9-2015 - Anil Choudhary, Member (J) And Raju, Member (T) For the Appellant : Shri Prasad Paranjape, Adv For the Respondent : Shri Hitesh Shah, Comm (AR) ORDER Per Raju 1. The appellants are an LTU engaged in the manufacture of shaving systems and safety razor blades. They have six factories, located at among other places, in Thane and Hyderabad. The factory at Thane failed to pay a part of the duty amounting to ₹ 1,92,64,263/- in the month of January 2013. Thereafter they paid Central Exc .....

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293/- through their common LTU CENVAT account on 26/03/2013. They paid the interest of ₹ 4,56,009/- in cash. The revenue was of the view that the reversal of the credit made in the CENVAT account in the month of March was not a proper payment of duty and hence the default which started in January, continued. Accordingly, a demand notice under rule 8 (3A) was issued in respect of entire clearances from 26.03.2013 to 31.12.2013. An amount of ₹ 31,85,56,189/- was demanded to be paid in .....

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andatory pre-deposit prescribed under section 35F of the Central Excise act 1944. 3. The appellants have pleaded that they have paid the entire amount from their CENVAT account and hence hundred percent of the duty demanded stands paid. In the circumstances they are not required to deposit any additional amount, i.e. amount required under Section 35F. For this purpose they relied on the circular of the CESTAT issued on 28.08.2014. In the said circular it is prescribed that if the mandatory depos .....

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dered the debit in CENVAT account sufficient compliance for the purpose of section 35F. In the said case the Commissioner had ordered deposit of the said amount in cash. The appellant's also relied on the decision of Tribunal in case of Meenakshi Associates - 2013 (295) ELT 578. In the said judgement following has been held - 16. For the sake of clarity we would like to add some more observations on this issue. Non-payment of excise duty arises often in administration of excise levy. Show Ca .....

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for any previous month payment through Cenvat credit is not a proper discharge of duty liability. This prohibition gets lifted the moment the default is made good along with appropriate interest on defaulted amount and normal situation is restored. So payments made through Cenvat credit during the defaulting period also becomes good payment once the default is made good by paying the defaulted amount along with interest. Interest on deemed non-payment of duty on clearances during the period of d .....

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t be examined. He argued that for the purpose of maintainability only section 35F can be considered. He argued that in view of Section 35F (ii) the appeal of the appellants cannot be entertained unless appellants deposit specified amount in terms of Section 35F. He argued that if any cognizance is taken of the reversal of amounts made in the CENVAT account it would amount to entertainment of appeals and pronouncement on the merits of the appeal. For this purpose he relied on the decision of Trib .....

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5F and circular 984/8/2014-CX dated 16.9.2014 the Tribunal came to the conclusion that since the said amounts claimed to be adjusted against the pre-deposit are themselves part of the dispute, the same cannot be considered towards as deposit under Section 35F. The learned AR also argued that no notice of the circular issued by the registrar of CESTAT can be taken as neither has authority to issue the same nor it says by which authority it has been issued. Learned AR also brought to our notice th .....

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al in case of Neesa infrastructure 2015 (321) ELT 328, are on the merits of the case. The decision of Hon Supreme Court in case of Jayaswal Neco Civil Appeal No. 1468 of 2004, Civil Appeal No. 7386 of 2005 creates a doubt on the issue. In case of Jayaswal Neco -Civil Appeal No. 1468 of 2004, Civil Appeal No. 7386 of 2005 Hon Supreme Court has observed as under: 22. This provision came up for interpretation before at least four High Courts and all these Courts took the view that even when the fac .....

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ition as under: "23. It is true that as per rule 173G (1)(b) also the payment utilising Cenvat credit is an approved manner of payment of duty by these rules. It is equally true that even in the absence of such a provision contained in Rule 173G (1)(b) accepting the mode of payment utilising Cenvat credit, an assessee, even by virtue of the provisions contained under Rule 49 read with Rule 57A, will be entitled to utilise such input credit. In other words, there is force in the contention o .....

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ay be, the consequences of making an assessee a defaulter and to deny him the benefit of utilising the input credit will become unworkable and ineffective. It has to be noticed as rightly pointed by the counsel appearing for the petitioner that the rule making authority took notice of this lacuna and by the Central Excise Rules, 2002 - second amendment 2005, which came into force from 1st April, 2005, the Central Excise Rules 2002 was amended and Rule 3A was inserted which reads as follows: &quo .....

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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 t .....

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the effect of taking away the benefit conferred by a separate rule since even without Rule 173G by virtue of Rule 49 read with Rule 57A a right has already conferred on the assessee to utilise the input credit for payment of duty at the time of discharging his liability to pay duty on the final product as provided for in the rules." 23. Not only we are in agreement with the aforesaid view taken by the High Courts, it is imperative to point out that even the Department accepted the aforesaid .....

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utilising Cenvat Credit. This also lends credence to our view which we have taken in respect of unamended provision that was applicable at the relevant time. From this it appears that the views of Hon Supreme Court on this issue are different from those of Hon High Court. Thus the law on the issue does not appear to be settled. 7. The short question to be decided is if the CENVAT debits made by the appellants during the period of default are sufficient for the purpose of section 35F. Tribunal, .....

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