TaxTMI 
TaxTMI 
2014 (12) TMI 656
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....te, it would invite interest liability. Subrule (3A) of Rule 8 provides that in case an assessee, who defaults in payment of such duty beyond 30 days from the due date, would have to clear the goods on actual payment of duty and that too without availing Cenvat Credit. In other words, in case of such defaulters the facility of monthly payment of excise duty is withdrawn and the clearance to be made on actual payment of duty would have to be without availing Cenvat Credit. Subrule (3A) of Rule 8 further provides that in case of any default to comply with this condition, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these Rules would follow. 2.2. On one occasion, the petitioners were required to pay interest of Rs. 11,400/on delayed payment of excise duty. The petitioners paid such interest, however, by utilizing the Cenvat Credit. The department holding a belief that until such interest of delayed payment of due was paid in cash, all subsequent clearances by utilizing Cenvat Credit would be irregular. Thus, for the subsequent period, though the petitioners did pay the excise duty of Rs. 19,16,737/but....
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.... Excise Act provides for penalty in case of nonlevy, short levy or non-payment or short payment or erroneous refund of the duty where the same is occasioned by reason of fraud or collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of the Act or the rules made thereunder with an intent to evade payment of duty. Likewise, section 11A which pertains to recovery of duties not levied or not paid or short levied or short paid or erroneously refunded makes a clear distinction when it gives the period of limitation available to the department to institute proceedings, in such cases between such non-payment having been occasioned due to fraud, collusion, etc. in which case a longer period of limitation is available as against rest of the cases. Likewise, under rule 12CC of the Central Excise Rules as it stood at the relevant time, power was given to the Government by notification to withdraw facilities from the manufacturers, registered dealers or exporters under certain circumstances having regard to the extent of evasion of duty, nature and type of offences or such other factors as has been relevant. In exercise of such powers, notificat....
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....ement which the assessee has already suffered which is credited to his cenvat credit account available to him for adjustment for payment of excise duty liability upon clearance of the finished product. If such facility is withdrawn, it could be appreciated, his ability to continue the business under such adverse financial climate would further diminish. This would be a cyclical vicious pattern where in every month he would fall behind by the due date unable to raise cash flow for payment of duty for the clearance which he desires to make and is therefore further saddled with the burden of paying such duty in cash without availing CENVAT credit. This rule thus imposes a wholly unreasonable restriction which is not commensurate with the wrong sought to be remedied. 31. This extreme hardship is not the only element of unreasonableness of this provision. It essentially prevents an assessee from availing cenvat credit of the duty already paid and thereby suspends, if not withdraws, his right to take credit of the duty already paid to the Government. It is true that such a provision is made because of peculiar circumstances the as....
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....right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality. 33. In the case of Om Kumar (supra), the Supreme Court recognized the applicability of the principle of proportionality in judging the validity of a provision on the touchstone of reasonableness under Article 14 of the Constitution. It was observed: "53. Now under Art. 19(2) to (6), restrictions on fundamental freedoms can be imposed only by legislation. In cases where such legislation is made and the restrictions are reasonable yet, if the concerned statute permitted the administrative authorities to exercise power or discretion while imposing restrictions in individual situations, question freque....