2012 (9) TMI 814

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.... Excise Rules, 2002. There was similar default for the month of Nov. 2006 and Dec. 2006 also. 2. In such circumstances Rule 8(3A)of the Central Excise Rules enjoins certain penal consequences. For the sake of convenience this sub-rule is re-produced below :- (3A) If the assessee defaults in payment of duty beyond thirty 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 assessee 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 sha....

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.... equal to the duty demanded was also imposed under Section 11AC of the Act. 6. Aggrieved by this order the Appellant has filed this appeal before the Tribunal. 7. The Appellants submits the following : (i)      That the Commissioner should not have passed the order when the Rule 8(3A) itself was being challenged in a writ petition ; (ii)    Rule 8(3A) talks of consequences under the Central Excise Rules, 2002 only and not those under the Central Excise Act itself. (iii)   Duty which is already paid is being sought to be recovered again which is patently illegal. (iv)   They submit that demand for interest is illegal because there is no provision in the C....

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....conditions "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". 11. It is relevant to note that what is prescribed is consequences and penalties as provided in these "Rules" not "consequences and penalties as provided in the Act". This is a second core argument of the Appellant. Before deciding this issue let us examine what are the consequences of clearances without payment of duty prescribed under the Act and the Rules. These are, - Under the Act (i)      Action under Section 11A for the recovery of the amount and interest payable (ii)    Interest will have to be paid under Section ....

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....even if it is not mentioned in the Rules. But interest will be payable from the date of each clearance to the date on which the default is made good. This is so because once the defaulted amount is paid, thereafter the payment made through Cenvat become proper even if it is paid before the date on which defaulted amount is paid. 14. If the Rules alone are seen the consequences are confiscation of goods and penalties under Rule 25 and Rule 26. The department has not taken the initiative to make use of the provisions regarding confiscation since no seizure has been effected. So the only consequence will be penalty. The Gujarat High Court has decided in CCE v. Saurashtra Cement Ltd. reported in 2010 (260) E.L.T. 71 (Guj.) that in such ....