2011 (9) TMI 642

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....ith interest were cleared on 8.12.07.  During the period, instead of paying duty consignment-wise without utilizing the CENVAT Credit as provided under Rule 8(3A) of CENVAT Credit Rules, 2002 (Rules), the appellant paid duty by utilizing the CENVAT account on monthly basis. The total duty involved in the period of default is Rs.8,66,642/- (Rupees Eight Lakhs, Sixty Six Thousands, Six Hundred & Forty Two only) and the appellant had paid Rs.50,130/- (Rupees Fifty Thousands, One hundred and Thirty Only) from PLA and the rest from CENVAT account.  Consequently, proceedings were initiated, which has resulted in imposition of penalty of Rs.2 lakhs (Rupees Two lakhs only) under Rule 25 of Rules and Rs.5,000/- (Rupees Five Thousands only)....

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....  5. During the period 1.4.03 to 31.3.05, Rule 8(3) reads as under: "(3) If the assessee fails to pay the amount of duty by the due date, he shall be liable to pay the outstanding amount along with interest @ 2% per month or Rs.1,000/- per day, whichever is higher, for the period starting with the 1st day after due date till the date of actual payment of the outstanding amount: Provided that the total amount of interest payable in terms of this sub-rule shall not exceed the amount of duty which has not been paid by due date. Provided further that till such time, the amount of duty outstanding and the interest payable thereon are not paid, it shall be deemed that the goods in question in respect of which the duty and interes....

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....r. Thus, there was need for passing an order by the Assistant Commissioner or Dy.Commissioner. 5.2 However, w.e.f. 1.6.06, vide Notification No.13/2006-CE(NT), dt.1.6.06, Rule 8(3A) was replaced, which reads as under: "(3A) - If the assessee defaults in payment of duty beyond 30 days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub-rule (4) of Rule 3 of CENVAT Credit Rules, 2004, the assesssee shall pay Excise duty for each consignment at the time of removal, without utilizing the CENVAT Credit till the date the assessee pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared witho....

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....eriod when default occurred in this case, once there was a default beyond 30 days, duty was required to be paid in respect of each consignment by debiting account current and CENVAT amount could not have been used. Therefore, the facts in this case are clearly distinguishable from the decision in the case of Saurashtra Cement Ltd. The same principle would apply to the case of Tejpal Paper Mills also.  Further, in the case of Ramson Rigid PVC Pipes, penalty under Rule 25 was upheld. In the case of Kitply Industries, the default occurred because no cheque was dis-honoured which was rectified with interest. Hence, that decision is not applicable. The facts in this case are entirely different.  On the other hand, I find that there are....