TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 295
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....Ltd Vs CCE, Raigad (2012(286)ELT 82(Tri-Mum)} vide order dated 15.6.2012 has held that since Rule 8(3A) clearly states that all consignment removed without payment of duty, consequences of penalties provided in the rules shall follow. Since, the removal of goods without payment of duty is with full knowledge of the contravention of the rules, any non-payment of duty in violation of rules invites penalty under Rule 25 of the Central Excise Rules, 2002. The provisions of Rule 25 are certainly invokable in respect of default cases under Rule 8(3A). It therefore, appears that penalty is definitely imposable and the goods so removed are liable to confiscation under Rule 25. Since the amount of default is Rs. 50,34,393/-, penalty commensurating to the contravention should have been levied under Rule 25 and not Rule 27. 4.2 The Commissioner has also erred by not imposing an penalty on the ground that show cause notice issued by the Assistant Commissioner, invoking Rule 27 has already been issued. The logic of non-imposing of penalty under Rule 25 merely because some other show cause notice invoking another rule has been issued, is not proper. The show cause notice dated 29.02.2012 had ....
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....so been issued on the same issue which is against the principle of law. They contended that payment of duty by utilizing CENVAT Credit amounts to good discharge of duty. Demanding duty again tantamount to demanding of duty twice for the same clearance. Hence, they argued that the action initiated in the present SCN goes beyond the "consequence and penal provisions" prescribed under Rule 8(3A). 25. I find that the main issue involved in this SCN is the penal provisions imposable under Rule 8(3A) for the defaults in payments made by them and the consequence of not following the same. For the sake of convenience Rule 8(3A) is reproduced below: "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 subrule (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 ....
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.... is also equally clear. It is only when the condition of payment of duty by the 5th or the 6th day of month following the previous month of clearance is not fulfilled by an assessee that the stringent requirement of collection of duty on each consignment and withdrawal of the facility of Cenvat credit follows. These are undoubtedly stringent provisions provided to deal with the class of assessees who are unable to pay the duty in time. 29. This brings us to the last limb of the petitioner's contention, namely, that the condition attached by sub-rule (3A) of Rule 8 is unreasonable and therefore, violative of Article 14 of the Constitution and amounts to serious restriction on the petitioner's right to carry on trade or business of his choice guaranteed under Article 19(1)(g) of the Constitution. This contention requires a closer scrutiny. As noted earlier, the restrictions of sub-rule (3A) come in two folds. Firstly, a defaulter assessee has to clear the consignments on spot payment of excise duty and secondly, that such excise duty has to be paid in cash without availing Cenvat credit. This rule does not make any distinction between the willful defaulter and the others. Though t....
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....al class of assessees who through their conscious act tried to evade duty. 30. It can be seen that the reasons for non-payment of excise duty can be manifold and not necessarily in all cases have to be willful default by an assessee despite availability of funds. Excise duty may remain unpaid due to economic reasons, due to slowness in the business or due to financial crunch temporarily felt by the manufacturer who though might have cleared the finished goods and also sold the goods in the market may not have received the payment as promised. All such cases of defaults willful or otherwise are clubbed together for the same treatment and a stringent condition of payment of excise duty without availing Cenvat credit is imposed. It can be appreciated that where a manufacturer falls behind the payment schedule on account of financial constraints, such as, slowing down of business, competition in the market reducing the profit margins, promised payments from the purchasers not coming forth or temporary labour disputes, would find it extremely difficult thereafter to raise further funds for payment of duty in addition to the duty which he has already paid. Cenvat credit is available t....
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.... had been cleared from the factory was sought to be lapsed. The Supreme Court struck down the rule further observing that if on the inputs the assessee had already paid the taxes on the basis that when the goods are utilized in the manufacture of further products as inputs thereto then the tax on those goods gets adjusted which are finished subsequently. Thus a right had accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. We may also recall that in the case of Dai Ichi Karkaria Ltd. (supra) it was reiterated that a manufacture obtains credit for the excise duty paid on raw material to be used by him in the production of an excisable produce immediately it makes the requisite declaration and obtains an acknowledgment thereof. It is entitled to use the credit at any time thereafter when making payment of excise duty on the excisable product. 32. As held by the Supreme Court in the case of Chantamanrao (supra), the phrase "reasonable restriction" connotes that the limitation imposed on a person in enjoyment of the right should no....