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2014 Supreme(Mad) 2518
High Court of Judicature at Madras
R. SUDHAKAR & G.M. AKBAR ALI, JJ.
Sivasakthi Auto Ancillaries Madras Pvt. Ltd.
Versus
The Customs, Excise and Service Tax & Another
C.M.A.No. 1853, 1857, 2224 & 2225 of 2014 & M.P.No. 1 of 2014
Decided On : 14-08-2014
For the Appellant:S.M. Deenadayalan, Advocate.
For the Respondents:P. Mahadevan, Advocate.
The duty liability discharged through CENVAT credit cannot be treated as due discharge of duty liability, and the appellant should pay duty without utilizing the CENVAT credit on consignment basis only, once the default was beyond 30 days from the due date, till they pay the defaulted amount with interest.
Headnote:
Central Excise Rules - Duty Payment - Rule 8(3A) - [Sheet Metal Pressed Automobile Components] - [Rule 8(1), Rule 8(3), Rule 8(3A) of the Central Excise Rules, 2002] - The court discussed the provisions of Rule 8(3A) of the Central Excise Rules, 2002, which states that if the assessee defaults in payment of duty beyond thirty days from the due date, 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. The court interpreted this provision and its implications on the duty payment by the assessee, which influenced the court's decision in dismissing the appeals for non-compliance of the conditional order of stay.
Fact of the Case:
The appellant, engaged in the manufacture of Sheet Metal Pressed Automobile Components, cleared finished goods on payment of duty. The department found that the appellant had defaulted in payment of duty beyond 30 days from the due date and issued show cause notices demanding duty, interest, and penalty.
Finding of the Court:
The court found that the appellant failed to comply with the conditional order of stay and dismissed the appeals. The court also remitted the matter to the Commissioner (Appeals) for fresh consideration.
Issues: Non-compliance with duty payment regulations, conditional order of stay, and differing orders for similar cases.
Ratio Decidendi: The court balanced the interest of the Revenue and the appellant, considered the offer made by the appellant, and found no error in the exercise of discretion by the Tribunal.
Final Decision: The appeals were dismissed for non-compliance with the conditional order of stay, and the matter was remitted to the Commissioner (Appeals) for fresh consideration.
R. Sudhakar, J.
1. C.M.A.Nos.1853 and 1857 of 2014 are filed challenging the Misc. Order Nos.40788 and 40787 of 2014, dated 13.5.2014 passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai (for brevity, “the Tribunal”).
2. C.M.A.Nos.2224 and 2225 of 2014 are filed challenging the Final Order Nos.40383 and 40384 of 2014, dated 2.7.2014 passed by the Tribunal.
3.1. The brief facts of the case are as under: The appellant is engaged in the manufacture of Sheet Metal Pressed Automobile Components falling under Chapter 87 of CETA, 1985. The assessee cleared the finished goods on payment of duty.
3.2. As per Rule 8(1) of the Central Excise Rules, 2002, duty on goods removed from the factory or warehouse during a month shall be paid by the 5th day of the following month, and in the case of goods removed during the month of March, the duty shall be paid by the 31st day of March. It also provides for other conditions, of which we are not concerned.
3.3. Rule 8(3) of the Central Excise Rules, 2002 provides that if the assessee fails to pay the amount of duty by due date, he shall be liable to pay the outstanding amount along with interest at the rate specified by the Central Government vide notification under Section 11AB of the Central Excise Act on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount.
3.4. Rule 8(3A) of the Central Excise Rules, 2002 states that 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.
3.5. The department, in the course of scrutiny of the returns filed by the assessee, found that on several occasions, the assessee had defaulted in payment of duty beyond 30 days from due date and, therefore, the assessee is liable to pay excise duty for each consignment at the time of removal without utilizing the CENVAT credit till the date the assessee discharges the outstanding amount with interest, including interest thereon, as per Rule 8(3A) of the Central Excise Rules, 2002.
3.6. Accordingly, the department issued a show cause notice dated 2.6.2011 demanding duty in respect of clearances of excisable goods from May, 2010 to December, 2010 under Section 11A of the Central Excise Act, 1944. That apart, interest under Rule 8(3) of the Central Excise Rules, 2002 read with erstwhile Section 11AB of the Central Excise Act was demanded, and penalty was sought to be imposed under Rule 25 of the Central Excise Rules, 2002 read with Rule 15(1) of the Cenvat Credit Rules, 2004. The notice was states as under:
“as to why:
(i) to (iii) xxx
(iv) the assessee, having defaulted in payment of duty beyond thirty days from the due date, should not be required to 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, as per Rule 8(3A) of the Central Excise Rules, 2002.”
3.7. Likewise, another show cause notice was issued on 3.1.2012 with regard to the clearances of excisable goods for the period from January, 2011 to October, 2011.
3.8. As no reply was received from the assessee for the above two show cause notices, the matter was taken up for adjudication and the original authority passed Order-in-Original Nos.8 and 9 of 2012-2013, dated 30.8.2012 in the following manner:
“(i) I hereby demand payment of the amount of duty of Rs.42,84,883
