SATENDRA VIKRAM SINGH

M/s. Shaifali Steels Limited, Kalol (Appellant 1) are engaged in manufacturing of Ferro Silicon Magnesium Alloy, CI Castings, Metal Roll etc. In ER-1 return for February-2009, duty payable was shown as Rs. 91,91,803/- against which, the Appellant has shown payment of Rs. 85,52,903/- from Cenvat Credit account and the balance payment of Rs. 6,38,900/- through TR6 Challan No. 16 dated 16.03.2009. Later on, it was found during investigation that they had paid the said amount of Rs. 6,38,900/- on 20th August, 2009 as against 5th March, 2009 which was the due date of payment. As appellant had paid the balance duty beyond 30 days from the due date, in view of Rule 8 (3A) of the Central Excise Rules, 2002, they were required to pay excise duty for each consignment without utilizing the Cenvat Credit. It was found that the appellant had utilized Cenvat credit of Rs. 3,60,18,851/- for payment of Central Excise duty for the period 05.04.2009 to 01.09.2009.

1.1 The department issued a Show Cause Notice dated 06.05.2010 proposing recovery of duty of Rs. 3,60,18,851/- under Section 11A of the Central Excise Act, 1944 read with Rule 8 (3A) of the Central Excise Rules, 2002 along with interest and penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. Separate penalty under Rule 27 was proposed on them for delayed filing of ER-1 returns of March and April 2009. A separate penalty was also proposed under Rule 26 on their Authorised Signatory Shri Rameshbhai Fulshakar Trivedi (Appellant 2) for his role.

1.2 The Show Cause Notice was adjudicated vide order dated 31.01.2012 wherein the Adjudicating Authority confirmed recovery of duty from the appellant along with interest. He imposed equal penalty under Section 11AC, a penalty of Rs. 10,000/- under Rule 27 of the Central Excise Rules, 2002 for late filing of each of the returns. He also imposed penalty of Rs. 50,000/- on the Authorised Signatory Shri Rameshbhai Fulshankar Trivedi under Rule 26 of the Central Excise Rules, 2002.

2. Aggrieved with this order the appellant filed appeal before this Tribunal taking the following grounds with prayer to set aside the impugned order with consequential benefits:-

● The proposition of Rule 8 (3A) was illegal and contrary to law as laid down by Hon’ble Gujarat High Court in the case of Banian & Berry bearings Pvt Ltd. He also cites the decision in the case of Noble Drugs Ltd 2007 (215) ELT 500 wherein it was held that what is lying in the credit is the amount of duty already paid on the imports and its utilization was equal to payment of duty through account current.

● Reliance is also placed on the decision of Tribunal in the case of MM Silk Mills where it is held that amount debited in Cenvat account was to be treated as amount debited in account current.

● If they again pay duty by PLA, amount already paid by them would be available as Credit. Therefore, it becomes revenue neutral situation. He relies on the decision of Hon’ble Supreme Court in the case of Narmada Chematur Pharmaceuticals Ltd reported in 2005 (179) ELT 276 (SC) wherein it was held that no demand or Show Cause Notice was necessary in revenue neutral transactions.

● Action of ordering recovery of interest is without any authority as Section 11AB gets attracted only when there is short levy or non-levy of duty which is not in their case.

● Equal penalty is not imposable on them as there was no illegal activity or malafide intent on their part. They had paid duty by utilizing Cenvat Credit which is also equal to account current as held in various case laws. They rely on the decision in the case of Rajasthan Spinning and Weaving Mills 2009 (238) ELT 3 (SC), judgment of Hon’ble Gujarat High Court in the case of Saurashtra Cement Ltd 2010 (260) ELT 71 (Guj.) and judgment dated 26th April, 2011 in the case of Prince Multiplast Pvt Ltd, order dated 07.06.2010 of the Tribunal in the case of Tejal Papers Mills Pvt Ltd