Provision of Rule 8(3) of CER

[Sanjay Gupta]

Rule 8(3) deals with the case of defaulter in payment of duty within 30 days from the due date and in case of default the goods cleared will be treated as not suffered any duty incidence and the assessee will have to pay consignment wise duty in cash without using Cenvat credit. The board circular says the default amount is a confirmed demand and action under section 142 of Customs Act for attachment and auction should be initiated in order to recover the dues.

Simultaneously there is always wrong utilisation of Cenvat credit and non payment of duty throgh Cash. Here comes into picture the Section 11A of the Central Excise Act which stipulates for non payment of duty a SCN to be issued and to be adjudicated.

No doubt Section prevails over rule and circulars therefore, it appears that raising demand ios a better option but few arguments are there that by raising demand you are converting confirmed demand into a dispute and delaying recovery proceedings.

Kindly comment on this dilemma.

AI Summary

Rule 8(3A) Clarification: 1% Monthly Penalty for Duty Payment Defaults, Cenvat Credit Use Explained A query was raised regarding Rule 8(3) of the Central Excise Rules, discussing the treatment of defaulters in duty payment and the implications of using Cenvat credit. It was clarified that the relevant provision is actually Rule 8(3A), amended by a 2014 notification. Previously, defaulters had to pay duty in cash without Cenvat credit, with penalties for non-compliance. The amendment now imposes a penalty of one percent per month on unpaid duties. This clarification resolves the dilemma of whether to raise a demand, as the updated rule provides a clear penalty framework.