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TMI Blog2024 (8) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... d of 50% of the duty i.e., Rs. 26,97,256/- as provided in the Rule 4(2)(a) of the CENVAT Credit Rules, 2004, and therefore contravened provisions of Rule 4(2)(a) of CCR, 2004. 1.2 Further, it was noted that for the month of December 2012 and January 2013, the total amount of eligible credit available was not sufficient to cover the amount of credit utilised for payment of duty on clearance of goods but, for the inclusion of the credit of Rs. 26,97,256/-. If it is considered that the appellant is not eligible to take 50% of the credit in the year in which they have received capital goods from the factory, the appellant is short of credit. Thus, it appeared that they have defaulted payment of duty on clearances of goods for the months December 2012 and January 2013 to the extent of Rs. 13,87,311/- and Rs. 9,96,807/- respectively. 1.3 The appellant had paid the outstanding amount of Rs. 13,87,311/- for the month of December 2012 along with interest of Rs. 1,68,986/- on 04.09.2013 and 10.09.2013. The appellant has paid the amount of Rs. 9,96,807/- being the duty short paid for the month of January 2013, along with interest. They also paid penalty of Rs. 2,68,729/-. The appellant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and availing credit instead of transferring of credit as such is only procedural lapse and the same cannot take away substantial benefits accrued to them. 2.4 The Department contends that the duty paid using such excess availed credit during December 2012 and January 2013 shall be construed as duty not paid to the extent of utilizing the credit. Therefore, the Department held that the appellant should have paid duty for period from February 2013 to September 2013 using PLA in terms Rule 8(3A) of the Central Excise Rules, 2002 (CER, 2002). 2.5 The alleged excess availed credit in September 2012 and utilized during December 2012 and January 2013, had been regularized by payment of duty equivalent to excess credit along with interest and penalty, even before issuance of the Show Cause Notice (Para 9 of the SCN). Therefore, invocation of Rule 8(3A) of CER, 2002 is not legally sustainable. Further, the condition contained in sub-rule (3A) of Rule 8 for payment of duty without utilizing the Cenvat credit till an assessee pays the outstanding amount including interest is declared unconstitutional. Therefore, the portion "without utilizing the cenvat credit" of sub-rule (3A) of Rule 8 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital goods is also declared in the monthly returns filed by the appellant. In order to invoke the extended period of limitation there should be an act of fraud or collusion or wilful misstatement or suppression of facts or contravention of provisions of the act with an intention to evade payment of duty. In the absence of any such ingredient, the invocation of the extended period is unwarranted for and not legally sustainable. Reliance is placed on the following judgements in support of the contentions: - i. UOI vs. Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] ii. Chemphar Drugs and Liniments [1989 (40) ELT 276 (SC)] iii. Cosmic Dye Chemical vs. CCE, Bombay [1995 (75) ELT 721 (SC)] iv. CCE, Aurangabad vs. Bajaj Auto Limited [2010 (260) ELT 17 (SC)] v. M/s. Uniworth Textiles Ltd vs. Commissioner of Central Excise, Raipur [2013 (288) ELT 161 (SC)] vi. C.C., C.E. & S.T. Bangalore (adj) vs. Northern Operating Systems [2022 (5) TMI 967-Supreme Court] In light of the above said submissions made both on the merits and on limitation, the demand is not sustainable and hence the levy of interest and imposition of penalty does not arise. 2.8 The Ld. Counsel praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . For this reason, 50% of the credit to the tune of Rs. 26,97,256/- has been denied by the Department and the said amount has been confirmed alleging violation of Rule 4(2) of Central Excise Rules, 2002. It is to be noted that even if the appellant is entitled to take only 50% credit in the first financial year, they would be able to take the balance credit in any subsequent year. The error is only with regard to the procedure of taking credit. The appellant paid the interest on the credit taken excess in the first financial year (Rs. 26,97,256/-) on 04.09.2013 and also paid the penalty in this regard. This has been noted in paragraph 9 of the Show Cause Notice. When the appellant is eligible to take the balance credit in subsequent financial year and has paid the interest and penalty in this regard, the Department ought not to have issued any Show Cause Notice. In any case, it is only a procedural infraction, and the appellant having paid interest as well as the penalty, in our view, the demand of duty confirmed along with interest and penalties in this regard requires to be set aside. Ordered accordingly. 7. The second issue is with regard to demand of duty raised alleging viola ..... X X X X Extracts X X X X X X X X Extracts X X X X
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