TaxTMI 
TaxTMI 
2014 (3) TMI 488
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount Current. In the monthly return filed by them, they have shown the said amount of Rs.7,92,871/- as paid in cash through Account Current even though no such amount was paid by them. On 25.11.2010, they adjusted the said amount from the Credit of Inputs etc., in contravention of first proviso to sub-rule 4 of Rule 3 of Cenvat Credit Rules, 2004. As per Rule 8 of Central Excise Rules 2002, the appellants are also permitted to make the said payment within 30 days alongwith interest. However, the appellants failed to deposit the said amount in cash as required under the Rules. The said amount was finally paid by them in cash vide GAR-7 challan on 4.6.2011 and interest on the said defaulted amount was paid on 5.7.2011. The department, during the scrutiny of the return for the month of October and November, 2010, detected the above mentioned irregularity and informed the appellants vide letter dated 31.1.2011 and also vide letter dated 15.2.2011. 2. As per the provisions of sub-rule 3A of Rule 8 of Central Excise Rules, 2002, introduced vide Notification No. 13/2006-CE(NT) dated 1.6.2006, if the assessee defaults in payment of duty beyond 30 days from the due date, the assessee, shal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; (iv) Rule 8(3A) itself stipulates that the duty is to be paid for each consignment at the time of removal without utilizing Cenvat credit and in the event of any failure it shall be deemed that such goods have been cleared without payment of duty. Since they have not paid the duty at the time of clearance of each consignment and they have utilized the Cenvat credit, all their clearances during the period are deemed to have been cleared without payment of duty. In view of this position, the dutiability during the period 6.12.2010 to 4.7.2011 cannot be considered as default in payment of duty but it has to be considered arrears of duty for the goods cleared without payment of duty. Thus the amount during this period has to be considered as arrears of duty. On 5.7.2011 when they paid the defaulted amount along with the interest, the credit earned during the earlier period is available to them for utilization. As per Board's circular No. 962/05/2012-CX.8 dated 28.3.2012, arrears of duty can be paid from the Cenvat Credit Account. Thus the payment made during the period 6.12.2010 to 5.6.2011 in respect of the clearances made during the said period gets regularized. Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eck the situation. Rules have undergone number of changes and Rule 8(3A) is the Rule as of now. The ld. A.R. further argued that a plain reading of the sub-rule would indicate that if an assessee defaults in making the monthly payment including further period of 30 days during which he can pay the defaulted amount alongwith interest, the manufacturer assessee is required to clear each consignment on payment of duty and also without utilizing the cenvat credit. In the present case, the admitted position is there was default in payment of duty. Not only there was default but the ER-1 return for the month of October gave the impression that the said amount was paid through Account Current even though such amount was never deposited in the Bank. Under the Rules, Cenvat credit as available on the last day of a particular month can only be utilized for payment of duty liability of that month. As is clear from the monthly return filed by the appellants, they did not have the balance so as to make the payment of defaulted amount. The department noticed the discrepancies and took up with them in January 2011 itself and further replied to their letter dated 7.2.2011 on 15.2.2011. In spite of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reject this contention of the appellants. The default period is from 6.12.2011 to 4.7.2011. Rule 8(3A) of the Central Excise Rules very specifically provides that the assessee shall pay excise duty for each consignment at the time of removal without utilizing Cenvat credit till the date the assessee pays the outstanding amount, interest thereof and penalty. The said sub-Rule reads as under:- (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 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." It is admitted position that the appellants have not paid excise duty for each consignment and without utilizing the Cenvat Credit. The main contention of the appellants is that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6th day of the following month, if the duty is paid electronically through internet banking and by the 5th day of the following month, in any other case : Provided that in case of goods removed during the month of March, the duty shall be paid by the 31st day of March : (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 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. (4) The provisions of Section 11 of the Act shall be applicable for recovery of the duty as assessed under rule 6 and the interest under sub-rule (3) in the same manner as the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see from using Cenvat credit till the entire outstanding amount including interest is paid. The explanation is only for the purpose of making the position clear. 13 .There is no question of invoking the Cenvat Credit Rules, 2004 in its entirety except for understanding the meaning of the term 'duty' or 'duty of excise'. In fact, the rigour of Section 8(3A) operates notwithstanding anything contained in sub-rule (1) and (4) of Rule 3 of Cenvat Credit Rules. Sub-rule 4(b) of Cenvat Credit Rules permits utilisation of Cenvat credit for payment of duty of excise on any final product. This provision makes the position very clear that Cenvat credit cannot be used as a matter of right for payment of duty of excise, in case the assessee defaults in payment of duty before the cut off period under Rule 8(3A) of Central Excise Rules, 2002. 14. The purpose of explanation that the expression 'duty' or 'duty of excise' shall also include the amount payable in terms of the Cenvat Credit Rules, 2004, would not amount to a permission for utilising the Cenvat credit for paying the excise duty. Rule 8(3A) is very specific when it....