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2016 (11) TMI 1225 - CESTAT HYDERABAD

2016 (11) TMI 1225 - CESTAT HYDERABAD - TMI - Interest on delayed payment of interest - Held that: - Rule 8(3A) states that it shall be deemed that such goods have been cleared (during the period of default) without payment of duty and the consequences and penalties shall follow. Interestingly, though Rule 8(3A) speaks about paying duty for each consignment at the time of removal, it is seen that department has not calculated the duty accordingly. Instead, interest alone is demanded. The demand .....

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follows the principal. Without principal amount there cannot be demand of interest alone. When there is no demand of duty for violation of Rule 8(3A), and when the duty paid is accepted by department, then the legal fiction provided in Rule 8(3A) having been not invoked in the show cause notice, I do not find the claim of interest alone would be sustainable. - Extended period of limitation - Held that: - it is clear that default to pay duty in August, 2010 was only a bonafide mistake. I fin .....

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nt Shri P. S. Reddy, AR for the Appellant ORDER [Order per: Sulekha Beevi, C.S.,] 1. Brief facts of the case: 1.1 Appellant is engaged in the manufacture of edible refined Palm Oil falling under CETH No. 15119020 of Central Excise Tariff Act, 1985 and clearing the same at NIL rate of duty in terms of Notification No. 03/2006 dated 01-03-2005 as amended. During the course of manufacture of edible palm oil, the by-products viz: 1. Palm Fatty acid distillate, 2. Fatty acid oil, 3. RBD palm stearin .....

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377; 41,843/- was paid by appellant on 31-03-2012. 1.3 The Range Officer, Range-III, Nellore, vide his letters dated 20-06-2012, 10-07-2012, 06-09-2012, 05-11-2013 and 22-11-2012 asked the appellant to pay the interest, for the reason that the duty on the clearances made during the period from 05-10-2010 to 31-03-2012( during the period of default) was not paid consignment-wise as provided in Rule 8(3A) of Central Excise Rules, 2002. The appellant vide their reply dated 03-03-2012 stated that ap .....

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ppellant paid the central excise duty amount of ₹ 23,97,580/- on 23-10-2010. It is submitted that the delay was not due to any fault on their part, but only due to mistake as they were not aware of such RBI guidelines. Further, the non-clearance was not intimated to them by the Bank. 1.5 Appellant paid interest of ₹ 41,843/- for the delayed payment of central excise duty on 23-10-2010. Later, a show cause notice dated 24-09-2013 was issued proposing demand of interest and for imposin .....

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rest demand of ₹ 9,18,418/- was confirmed for contravention of Rule 8(3A) and the penalty of ₹ 10,000/- was imposed. 1.7 The appellant under its application dated 02-10-2014 requested the learned Commissioner to rectify the error apparent on record as regards quantum of interest. However, the application was not accepted by the department and was advised to file appeal as only remedy. Hence this appeal. 2. On behalf of the appellant the Ld. Counsel Shri S.J.Vyas argued both on merits .....

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ount was shown in cheque along with decimals. On coming to know, immediately, appellant paid the duty on 23-10-2010 (which was due on 05-09-2010). The interest of ₹ 41,843/- on this delayed payment of duty was however paid only on 31-03-2012. The present interest demand on account of delayed payment of interest. The appellant contends that there is no determination of duty in the show cause notice and therefore, the demand of interest and penalty is unsustainable. Further, that the demand .....

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or by including the paise figures(decimals) in the cheque along with the figures of rupees and it occurred only due to bonafide mistake as the appellant did not know about such RBI guidelines. The bank also did not intimate the non-clearance of cheque. The error being unintentional, no penal action can be imposed, and that the extended period cannot be invoked. 3. Against this, the Ld AR, Shri P.S.Reddy reiterated the findings in the impugned order. He submitted that the appellant defaulted to p .....

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n sub rule (1) and (4) of Rule 3 of Cenvat Credit Rules, 2004, the assessee is liable to pay excise duty for each consignment at the time of removal, till the date of payment of outstanding amount including interest. In the present case, though duty was paid on 23-10-2010, the interest was still outstanding. The same was paid only on 31-03-2012. That therefore, appellant is bound to pay the interest on the duty paid in each month for clearance of goods,, till the outstanding interest is paid. He .....

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ence. There is no case for the department that there was no sufficient balance in the account. Therefore, the contention of appellant that it was a bonafide mistake is acceptable. 6. The present demand is not duty and its interest. It is a demand of interest for delay in payment of interest. The interest demanded is not calculated upon the delayed amount of interest (ie. ₹ 41,843/-). It is calculated by considering that appellant has defaulted payment of duty on all months from October, 20 .....

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of interest. S.No. Month Total duty (Rs.) Interest (Rs) 1. October, 2010 1449008 10271 2 November, 2010 19185660 9931 3 December,2010 20851123 15676 4 January, 2011 1706080 13925 5 February,2011 4705 10 6 March,2011 1040506 67288 7 April, 2011 748833 4583 8 May,2011 276922 26235 9 June,2011 4434803 433921 10 July, 2011 4769228 57782 11 August, 2011 2507521 19594 12 September, 2011 7878706 85519 13 October, 2011 1230965 12627 14 November, 2011 1818385 14527 15 December, 2011 3993165 41774 16 Janu .....

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