TaxTMI 
TaxTMI 
2015 (3) TMI 1258
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....e Central Excise Act, 1944 [in short 'the Act'). These applications have been filed for settlement of the dispute arising out of Show Cause Notice issued under DGCEI F. No. 150/KZU/KOL/Gr.D/2011/3015-17, dated 31-5-2013 (hereinafter referred to as 'the SCN') by the Addl. Director General, DGCEI, Kolkata Zonal Unit, Kolkata (hereinafter referred to as 'the DGCEI') answerable to the Commissioner of Central Excise & Service Tax, Bolpur Commissionerate Nanur Chandidas Road, Sian, Bolpur - 731 204 (hereinafter referred to as 'the jurisdictional Commissioner' for short). 2. Briefly, as per the Show Cause Notice, the applicant is a manufacturer of Sponge Iron falling under Chapter Heading No. 7203 of the First Schedule to the Central Excise Tariff Act, 1985 and holds Central Excise Registration No. AADCM1188MXM001. On 12-7-2011, the officers of DGCEI searched the aforesaid factory and office premises of the applicant and other "related premises and seized some records, documents and obtained statements from concerned persons. Examination of the seized records and perusal of statements revealed that the documents in seized File No. 02/MSPL/City/Off/KOL/11 were actually 'Weight Slip....
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....1300054 & 02204110611201300230 of Rs. 50,00,000, Rs. 40,00,000 &. Rs. 2,70,862 respectively and e-payment under Challan No. 00462, dated 1-7-2014 & 00476, dated 1-7-2014 for Rs. 20,00,000 &. Rs. 26,10,764 respectively before approaching the Commission. The balance amount of Rs. 10,54,525 has not been admitted as additional liability towards duty by the applicant. 4.2 The co-applicants, in their applications dated 2-7-2014 admitted the allegations made in the SCN as far as it relates to them and requested for waiver of penalty and prosecution on them. 4.3 Having admitted duty liability of more than Rs. 3 lac, and claiming to have made full disclosure while approaching for settlement with open mind, the applicants prayed for allowing the cases pending before Adjudicating Authority, to be settled granting immunities from interest, penalty and prosecution under the Act as they had already paid the duty and interest. The applicant prayed for allowing the case to be proceeded with and settled granting immunities from penalty and prosecution since they : (i) fulfilled all the conditions required for settlement of a case, (ii) have made full and t....
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....& Power Ltd. (Unit. II) which was earlier settled by this Commission, the applicant, M/s. Maithan Steel & Power Ltd. (Unit. II) had approached the Hon'ble Calcutta High Court and in the petition before the Hon'ble Calcutta High Court, M/s. Maithan Steel & Power Ltd. (Unit. II), have contested non-grant of benefit under Section 11AC. Shri Prabir Mukherjee, SIO, submitted that Section 11AC of the Central Excise Act, 1944, has been amended with effect from 8-4-2011 and hence the benefit which was earlier available under Section 11AC is not available now. 7.3 Shri Harsh Shukla, Chartered Accountant, submitted a copy of the stay order granted by the Hon'ble Calcutta High Court in the W.P. 27653(W) of 2014, dated 25-9-2014 [2015 (330) E.L.T. 121 (Cal.)]. It was also informed by Shri Harsh Shukla, Chartered Accountant, that they have approached the Income Tax Settlement Commission admitting the Income-tax liability. 8. Having gone through the records of the case and submissions of the applicants and Department, the Bench proceeds to decide the case. The applicants have admitted duty liability of Rs. 1,73,25,387/- and have also not disputed that interest is payable. However....
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....e, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B) of Section 11A till the date of payment of such duty". 9. Thus, it is clear that interest is liable to be paid when the duty is not discharged by due date. The Bench has perused the judgments cited by the applicants in defence of the method adopted by them to calculate the interest. None of these Judgments touch upon the issue relating to the manner of calculation as contended by the Applicant. Hon'ble Kerala High Court in the case of Apollo Tyres Ltd. v. Deputy Commissioner of Central Excise, Thrissur-I reported in 2012 (281) E.L.T. 370 (Ker.) examined the issue whether adjudication is called for before raising demand of interest under Section 11AA of the Central Excise Act, 1944 and also under Section 75 of the Finance Act, 1994. It does not deal with the manner of calculation of interest. Further, the reliance placed on this case by the applicant is misplaced also for the reason that issues mentioned therein were let open fo....
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.... cannot be refunded. The appeal is allowed to this extent." 10. The manner in which the duty is to be discharged is very clearly spelt out in Rule 4(1) and Rule 8(1) of the Central Excise Rules, 2002. Central Excise Duty can be paid either by utilising CENVAT credit or in cash. If an assessee has Cenvat Credit but does not utilise the same for payment and removes the goods without payment, the duty is not discharged. Having Cenvat credit available with them, but not utilising the same for payment of duties and removing the goods without payment of duty, does not absolve them of their duty liability. Once the duty liability has arisen, then as per Section 11AA and Section 11AB, payment of interest is mandatory from due date. Once the applicants have admitted their duty liability, they cannot claim relief from payment of interest just because Cenvat credit was available with them, which was not utilised for payment of duties. Further, non-payment of duties at the time of removal as alleged in the SCN has been admitted by the applicants. Since the applicant did not pay the duty on finished excisable goods either by payment through the Cenvat Credit available with them or by pa....
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.... liability had arisen after the date of amendment of Section 11AC on 8-4-2011. The amended Section 11AC, clause (a), provides that : "where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud or collusion or any wilful dis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person, who is liable to pay duty as determined under sub-section (10) of Section 11A shall also be liable to pay a penalty equal to the duty so determined." 13. Exactly, the issue, as raised by M/s. Maithan Steel & Power Ltd. (Unit-II) in W.P. 27653(W) of 2014, has been examined by the Hon'ble High Court of Delhi in the case of M/s. Ashwani Tobacco Co. Pvt. Ltd. v. Union of India reported in 2010 (251) E.L.T. 162 (Del.). In that case, Settlement Commission had settled the duty liability at Rs. 4,74,09,053/- and the penalty at Rs. 3,00,00,000/-. M/s. Ashwani Tobacco Co. Pvt. Ltd. had approached Hon'ble Delhi High Court seeking the following relief : (i) Quash and set aside the impugned miscellaneous order d....
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.... (Del.) (Ashwani Tobacco Co. Pvt. Ltd. v. Union of India). While dismissing the SLP, the Supreme Court passed the following order :- "In the facts and circumstances of the case, we are not inclined to interfere with the impugned judgment and order passed by the High Court. The Special Leave Petition is dismissed." 14. These judgments of Hon'ble Supreme Court and Delhi High Court pertain to the period prior to the amendment of Section 11AC on 8-4-2011 when the law itself provided for penalty being reduced to 25% of the duty involved, if the same was paid within 30 days of the communication of the order of Central Excise officer determining the duty. This option of paying penalty to the extent of 25% of the duty involved stands withdrawn w.e.f. 8-4-2011. 15. In the instant case, out of the total duty amounting to Rs. 1,73,25,387/- accepted by the applicants, a sum of Rs. 1,07,19,305/- pertains to the period prior to 8-4-2011 and the balance amount relates to the period after 8-4-2011 when the option of paying 25% of the duty determined as penalty is no longer available. Some changes in the provisions of Section 11AC of the Act have been proposed in the Union Budget....