TaxTMI 
TaxTMI 
2022 (5) TMI 905
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....s is upheld." 2.1 Appellant are holding Central Excise Registration for manufacture of excisable goods namely Special Denatured Spirit falling under Tariff Item 22072000 of the First Schedule of Central Excise Tariff Act, 1985 (CETA) and non excisable goods namely Rectified Spirit, out of the input, viz. Molasses, falling under Tariff Item 17031000 of the CETA. 2.2 During the months of June and July 2012, the Appellant had procured 3521.565 M.T. of molasses as an input from three Khandsari Sugar manufacturing units, viz. M/s Hanuman Khandsari Sugar Mills, M/s Shri Ambai Magaswargiya Shetkari SSK Ltd. and M/s Krishnakamal Agrotech Sugar Ltd. In terms rule 4(2) of the Central Excise Rules, 2002 appellants were required to pay the duty on the molasses from the Khandsari unit, as if the same was manufactured by them. 2.3 The Appellant had failed to pay Central Excise duty on the said quantity of molasses as required under Rule 4(2) of the Rules read with Rule 8(1) of the Rules, in the capacity of procurer; that the said duty totalling Rs.27,53,349/ - was paid by the Appellant in the months of October 2012, December 2012 and February 2013. 2.4 A Show Cause Notice dated 02.07....
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....en note available in file, appellant have assailed the impugned order stating as follows • The appellant procured molasses from khandsari units. As per provisions of Rule,4(2) of Central Excise Rules, 2004 the procurer shall pay the duty leviable on such molasses, • in the same manner as if such molasses have been produced by the procurer. • The appellant submits that the Rule, 4(2) provides procurer of molasses is producer (Deemed manufacturer) and Rule, 5(2) provides rate of duty of such molasses. • The appellant paid the duty from CENVAT account on said molasses produced/produced by them is good payment. • The appellant submits that as per Rule 4(2) of the Central Excise Rules, 2002 duty is required to be paid by the procurer of molasses by treating the procurer as the producer of molasses. Thus the provisions of Rule 4(2) of the Rules have created a legal fiction where by the procurer of molasses i.e. Appellant becomes the producer of molasses and is required to pay the duty on the said molasses. Once the procurer of molasses is treated as the (deemed) producer, as per the said provisions of Rule 4(2), the molasse....
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....e Rules, 2002 was required to pay the Central Excise Duty due on the said goods treating them as if the said goods have been manufactured by them. Rule 4 (2) and Rule 5, creates the liability to pay the Central Excise Duty on the recipient of the goods by treating them as "deemed manufacturer" of the impugned goods. These rules do not provide for the manner of payment of the duty in respect of these goods. In para 9 and 10, of the impugned order following has been recorded: "9. In the present case, it is not disputed that the Appellant had procured 2601.745 M.T. of Molasses in June 2012 and 919.820 M.T. of Molasses in July 2012 (i.e. total 3521.565 M.T. of Molasses), but had not discharged duty of Rs.27,20,409/ - payable on the same by the due dates, i.e. 5th/6th of the following months, i.e. by 5th/6th July 2012 & by 5th/6th August 2012, respectively. As per the provisions of Rule 4(2) of Rules, when molasses is procured from a khandsari sugar factory, the person who procures the said molasses from such factory or otherwise for use in the manufacture of any commodity, whether or not excisable, is required to pay the duty on the said molasses. Thus, the contravention of th....
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....ent of the Appellant that the procurer of molasses be treated as the producer of the said goods and to treat the same as their deemed final product, and to accept the said payment of duty from CENVAT Credit account. I find that wherever the legislature in its wisdom deemed it proper to permit utilization of CENVAT Credit for payment of duty on inputs by the procurer, it has made the necessary legal provision for the same in the CCR. This can be understood by referring to Rule 2 (naa) of the which defines the term 'manufacturer' or 'producer' for the purposes CCR, as under: "(naa) "manufacturer" or "producer": (i) in relation to articles of jewellery or other articles of precious metals falling under Heading 7113 or 7114 as the case may be of the First Schedule to the Excise Tariff Act, includes a person who is liable to pay duty of excise leviable on such goods under sub-rule (1) of rule 12AA of the Central Excise Rules, 2002; (ii) in relation to goods falling under Chapters 61, 62 or 63 of First Schedule to the Excise Tariff Act, includes a person who liable to pay duty of excise leviable on such goods under subrule (1A) of rule 4 of the ....
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.... that where any person had, instead of paying duty, authorised job worker to pay the duty leviable on goods manufactured in his behalf under the provisions of sub-rule (1A) as it stood prior to the publication of this notification, he shall be allowed to obtain registration any comply with the provisions of these rules within a period of thirty days from the date of publication of this notification in the Official Gazette. Explanation.- For the purposes of this sub-rule, the expression "job worker" means a person engaged in manufacture, or undertaking any process on behalf and under the instructions of such person for manufacturing, from any inputs or goods supplied by such person or by any other person authorised by such person so as to complete a part or whole of the process resulting ultimately in the manufacture of goods falling under chapters 61 or 62 or 63 of the First schedule to the Tariff Act, and the term "job work" shall be construed accordingly."; (2) Notwithstanding anything contained in sub-rule (1), where molasses are produced in a khandsari sugar factory, the person who procures such molasses, whether directly from such factory or otherwise, for us....
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....paid, by treating the person making the payment of the duty as deemed manufacturer. Hence in terms of the Rule 3 (4) of the CENVAT Credit Rules, 2004, if Commissioner (Appeal) is of view that duty liability in terms of the Rule 4 (1A) and 12AA (1) could have been discharged from the CENVAT account, then same should be true for the duty to be discharged under Rule 4 (2). Hence I do not find myself in agreement with the impugned order to this extent. 5.4 Be that as may be in para 12 of the impugned order following has been recorded: "12. In their grounds of appeal the Appellant have not only referred to the utilization of CENVAT Credit for payment of duty on the said 3521.565 M.T. of molasses, but have also stated that if duty is again paid from their PLA account, then it would amount to double payment of duty on the same goods. In this regard, from the facts on record in respect of this procurement of 3521.565 M.T. of molasses from Khandsari Sugar Factories by the Appellant in the months of June and July 2012, I find that the Appellant had wrongly availed CENVAT Credit totaling Rs.27,20,409/ - during June and July 2012 without payment of any duty on the said 3521.565 MT ....
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....ns as observed by the Commissioner (Appeal), no duty either from CENVAT Account or in cash have been paid in respect of these procurement. 5.5 In respect of the levy of interest para 11 of the impugned order observes as follows: "11. Coming to the aspect of recovery of interest on the Central Excise Duty rot paid, under Section 11AA of the Act, Duty not paid is required to be recovered along with applicable interest. In other words, interest is only a shadow of the Duty not paid and is compensatory in nature for the Govt. exchequer. Accordingly, I hold that interest under Section 11AA of the Act is also recoverable from the Appellant, and the decision of Ld. Respondent is correct in this regard too." It is settled by the decisions of this tribunal and courts that interest liability is associated with the delay in payment of duty. In view of the plethora of decisions on this issue I am in agreement with the observations made in para 11 of the impugned order. 5.6 On the issue of penalty para 13 of impugned order records as follows: "13. Regarding the issue of imposition of Penalty, I find that the principle of sell-assessment is in vogue in the Central Exci....