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CX – Rule 8(3A) of CER – There is no bar in making use of accumulated Cenvat Credit in making payment of CE Duty even during default period: CESTAT

2019-TIOL-2018-CESTAT-KOL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH, KOLKATA

Ex. Appeal No. 75405/17

Arising out of Order-in-Appeal No.114/Kol.IV/16-17, Dated: 07.12.2016
Passed by Commr. of Central Excise (Appeals), Kolkata

Date of Hearing: 20.02.2019
Date of Decision: 20.02.2019

M/s SKILL DYE CHEM PVT LTD

Vs

COMMISSIONER OF CENTRAL EXCISE
KOL IV

Appellant Rep by: Adjournment Request
Respondent Rep by: Shri H S Abedin, Assistant Commissioner AR

CORAM: P K Choudhary, Member (J)

CX – The assessee is engaged in manufacture of Acid Slury – SCN was issued alleging that during the period from 05.09.2010 to 11.10.2010, the assessee contravened the provisions of Rules 4 & 8 of CER, 2002 – The assessee was required to pay Central Excise duty along with Higher Education Cess and Secondary Education Cess – The assessee debited Rs.18,94,212/- on 31.07.2010 from their Cenvat Account – But there was a short fall in payment of Higher Education Cess and Secondary Education Cess – Further, it was found that there was neither any credit balance of Higher Education Cess and Secondary Education Cess in their Cenvat Account nor in their PLA Account on 31.07.2010 and thereby, they defaulted in payment of Rs.30,280/- & Rs.15,122/- – The defaulted amount was paid and the interest was paid on 11.10.2010 – This resulted in default in payment of Central Excise duty – Revenue was of the view that during the period of default, assessee was required to make payment of Central Excise duty on consignment to consignment basis under Rule 8 (3A) without utilizing cenvat credit, which has not been complied with – The Jurisdictional High Court at Calcutta, in the case of Goyal MG Gases Pvt. Ltd has followed the decision of Gujarat High Court in Indsur global Ltd. –2014-TIOL-2115-HC-AHM-CX and has held the portion of rule 8 (3A) as ultra vires – By respectfully following the decision of Jurisdictional High Court, there is no bar in making use of accumulated Cenvat Credit in making payment of Central Excise Duty even during the default period – In the result, the impugned order is set aside: CESTAT

Appeal allowed

Case laws cited:

Indsur global Ltd. V. Union of India – 2014-TIOL-2115-HC-AHM-CX… Para 4

Sandley Industries v. union of India – 2015-TIOL-2490-HC-P&H-CX… Para 4

Malladi Drugs & Pharmaceuticals Ltd. v. union of India – 2015-TIOL-1262-HC-MAD-CX… Para 4

Precision Fasteners Ltd. V. CCE – 2014-TIOL-2211-HC-AHM-CX… Para 4

A.T.V. Projects India ltd. v. Union of India – 2016-TIOL-2015-HC-ALL-CX… Para 4

Goyal MG Gases Pvt. Ltd. vs. Union of India-2017- VIL-655-CAL-CE… Para 4

FINAL ORDER NO. 75200/2019

Per: P K Choudhary:

When the matter is called, none appeared on behalf of the appellant despite notice. However, a letter dated 19.02.2019 has been received from the Director of the Appellant Company, where a request is being made for an adjournment. Since the present appeal lies in a narrow compass, the prayer for adjournment is declined. Accordingly, with the consent of the ld.D.R. for the Revenue, the appeal is taken up for disposal.

2. This is an appeal filed by the Appellant against Order-in-Appeal No.114/Kol.IV/16-17 dated 07.12.2016.

3. The facts of the case in brief are that the appellant is engaged in the manufacture of Acid Slury classifiable under Chapter 34 of the First Schedule to the Central Excise Tariff Act, 1985. Show-cause notice dated 25.04.2011 was issued alleging that during the period from 05.09.2010 to 11.10.2010, the appellant contravened the provisions of Rules 4 & 8 of the Central Excise Rules, 2002. The appellants were required to pay Central Excise duty of Rs.18,94,212/- along with Higher Education Cess of Rs.37,886/- and Secondary Education Cess of Rs.18,941/-. The appellant debited Rs.18,94,212/- on 31.07.2010. from their Cenvat Account. But there was a short fall in payment of Higher Education Cess and Secondary Education Cess. Further, it was found that there was neither any credit balance of Higher Education Cess and Secondary Education Cess in their Cenvat Account nor in their PLA Account on 31.07.2010 and thereby, they defaulted in payment of Rs.30,280/- & Rs.15,122/-. The defaulted amount was paid on 04.10.2010 and the interest of Rs.970/- was paid on 11.10.2010. This resulted in default in payment of Central Excise duty. Revenue was of the view that during the period of default, the appellant was required to make payment of Central Excise duty on consignment to consignment basis under Rule 8 (3A) without utilizing the cenvat credit, which has not been complied with. The Adjudicating Authority confirmed the demand along with interest and also imposed a penalty of Rs.10,00,000/- (Rupees ten lakhs) upon the appellant. On appeal, the ld.Commissioner (Appeals) upheld the adjudication order and rejected the appeal. Hence the present appeal before the Tribunal.

4. The Ld. Advocate submitted that the provisions of Rule 8 (3A) of the Central Excise Rules, 2002, based on which the demand for duty has been raised by the Department has been struck down by the various High Courts as ultra vires. In this connection, he referred to some of the decisions, (i) 2014 (310) ELT 833 (Gujarat) (Indsur global Ltd. V. Union of India) = 2014-TIOL-2115-HC-AHM-CX, (ii) 2015 (326) ELT 256 (Punjab & Haryana), (iii) (Sandley Industries v. union of India) 2015-TIOL-2490-HC-P&H-CX , 2015 (323) ELT 489 (iv) (Mad)-2015-VIL-208-MAD-CE (Malladi Drugs & Pharmaceuticals Ltd. v. union of India) = 2015-TIOL-1262-HC-MAD-CX, (v) 2015 (316) ELT, 595 (Gujarat), (vi) Precision Fasteners Ltd. V. CCE and = 2014-TIOL-2211-HC-AHM-CX (vii) 2016 (314) and 2016 (341) ELT 603 (Allahabad)- A.T.V. Projects India ltd. v. Union of India = 2016-TIOL-2015-HC-ALL-CX, (viii) Goyal MG Gases Pvt. Ltd. vs. Union of India-2017- VIL-655-CAL-CE.

5. The Ld. Advocate submitted that in view of the above decisions including the decision of the Jurisdictional High Court, there is no bar in making use of the accumulated Cenvat Credit for making payment of Central Excise Duty even during default period.

6. The Ld. DR submitted that the present issue regarding the applicability of Rule 8 (3A) of the Central Excise Rule, 2002, has been decided by various High Courts against Revenue. However, Revenue has challenged all such orders by filing SLP before the Hon’ble Supreme Court. The Hon’ble Supreme Court has admitted the SLP and had stayed the operation of all such decisions of the High Courts. Accordingly, he submitted that the issue may be kept pending until outcome of the decision of the Hon’ble Supreme Court.

7. Heard the ld.D.R. for the Revenue and perused the appeal records.

8. I have carefully perused the decisions of the various High Courts cited by the Ld. Advocate. I also note that the Jurisdictional High Court at Calcutta, in the case of Goyal MG Gases Pvt. Ltd has followed the decision of the Gujarat High Court in Indsur global Ltd. V. Union of India and has held the portion of rule 8 (3A) as ultra vires.

9. By respectfully following the decision of the Jurisdictional High Court, I hold that there is no bar in making use of the accumulated Cenvat Credit in making payment of Central Excise Duty even during the default period. In the result, the impugned order is set aside and the appeal is allowed.

(Dictated and pronounced in the open Court)

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