Case Law Details
Prasanthi Wax Oils Private Limited Vs Commissioner of Central Excise (CESTAT Kolkata)
CESTAT find that the issue is no more res integra and is squarely covered by the judgement of the Hon’ble Calcutta High Court in the case of M/s. Goyal MG Gases Pvt. Ltd. Vs. Union of India & Others reported in 2017 (8) TMI 1515 – CALCUTTA HIGH COURT, wherein it is categorically held that when Rule 8 (3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon’ble Court further declared Rule 8(3A) as invalid which is not stayed by the Hon’ble Supreme Court.
CESTAT find that the Hon’ble Gujarat High Court in the case of Indsur Global Ltd. v. UOI [2014 (310) E.L.T. 833 (Guj.) has declared the words “without utilizing Cenvat Credit” under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant.
CESTAT find that the said judgment has been followed by the Hon’ble Calcutta High Court in the case of Goyal MG Gases Pvt.Ltd. v. UOI cited (supra) which is not stayed by the Hon’ble Supreme Court. The Hon’ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee.
CESTAT find that the demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count.
FULL TEXT OF THE CESTAT KOLKATA ORDER
When the matter was called, none appeared on behalf of the Appellant, nor there is any prayer for adjournment. Since the Appeal is very old and pertaining to the year 2011, the same is taken up for hearing with the consent of the Ld.Authorized Representative for the Department.
2. The dispute in the present Appeal is that the Appellants have made default in payment of duty for the month of November 2009 on the due date i.e. 05.12.2009. In the grounds of Appeal, the Appellants have stated that the said amount was later made good by making payment in cash.
3. The Appellant is engaged in the manufacture of Transformer Oil (Servo electra) on behalf of M/s. Indian Oil Corporation Ltd. The main raw materials like Base Oil (Crude Oil), Additives, Barrels (Packing Material) etc. are supplied by M/s. IOC on which duty at the appropriate rate have already been paid. The Appellant undertakes the processing to convert the Base Oil into Transformer Oil and after packaging, the said finished products are supplied entirely to M/s. IOC as per the agreement. Since the duty paid raw materials and packaging materials supplied by M/s. IOC have been used in or in relation to the manufacture of the final product, the Appellant have been availing the Cenvat Credit of CE duty paid on the said inputs. At the time of clearance of the finished product, the Appellant have been availing the Cenvat Credit of CE duty paid on the said inputs. At the time of clearance of the finished product, the Appellant have been partly utilizing the Cenvat Credit lawfully earned and partly by debit from the account Current. Normally 85 to 90% of the monthly duty liability has been discharged by debiting the Cenvat Account and remaining 10 to 15% of duty liability has been paid from PLA.
4. The Appellant obtained the Central Excise Registration from the department and have been following all the Central Excise procedures/formalities meticulously. In the past there was no occasion of any procedural irregularity or any instance of non payment, short payment or delayed payment of duty. During November 2008 the Appellant were liable to pay duty amounting to Rs.19,21,288.00 out of which they paid Rs.14,93,259.00 from their Cenvat Credit by the due date i.e. 05.12.2008. The remaining amount of Rs.4,28,029.00 could not be paid within the stipulated period because of severe fund crunch. Being unable to arrange fund for payment of that portion of duty, the Appellant requested M/s. IOC to reimburse the duty to help the Appellant to avoid default in paying of duty. M/s. IOC issued a cheque dated 22.01.2009 and the balance amount of Rs.4,28,029.00 was debited on 30.01.2009 vide entry Sl.No.16 in the PLA along with interest amounting to Rs.4,574.00. However, because of genuine clerical mistake in interest calculation, the interest liability was worked out at Rs.4,574.00 instead of the actual amount of Rs.8,447.00. The Appellant deposited the differential interest amounting to Rs.4,114.00 by debit in the PLA on 14.12.2009. For this genuine and unfortunate mistake of paying a small amount of interest, the Appellant have been made liable for payment of huge amount of duty of Rs.92,09,289.00 and penalty of equal amount by very strict and narrow interpretation of Sub-Ruloe (3A) of Rule 8 of the said Rules. The Appellant submits that the basic amount of duty has duly been paid in full by 30/01/2009 along with interest. It is therefore submitted that even if any default occurred, it continued only upto 30/01/2009. It is, therefore, absolutely illegal and improper to allege that the default continued upto 14/12/2009 only on the ground that a portion of interest liability has been paid on 14/12/2009 arising out of simple calculation mistake. The fact remains that the Appellant paid the outstanding amount of duty amounting to Rs.4,28,029.00 along with the interest on 30.01.2009. Therefore even if a very restrictive construction of Rule 8(3A) of the said Rules is taken, the default at most continued uptp 30/01/2009. Therefore, even if the Appellant forfeited the facility of monthly payment as provided in Sub-Rule (1) of Rule 8, such forfeiture can be said to be applicable only uptp 30/01/2009. The Appellant could have been debarred from paying duty from Cenvat Account from 06.01.2009 to 30/01/2009 and could have been made to pay duty for each consignment cleared during 06/01/2009 to 30/01/2009 by debiting from PLA.
5. On the contrary, the department initiated the proceedings directing the Appellant to show cause as to why the facility of monthly payment of duty by utilizing the lawfully earned Cenvat Credit should be disallowed for the entire period from 06/01/2009 to 14/12/2009 when the Appellant made good of the deficiency by making the payment of differential interest of meager amount of Rs.4,114.00.
6. The Appellant submits that if at all the less payment of interest due to calculation mistake occurred, the same cannot be equated with default in making payment of duty because ‘default’ is a positive act and is totally different from unintentional less payment because of genuine calculation mistake. It is therefore submitted that in the present situation, Sub-Rule (3A) of Rule 8 of the said Rules cannot be applied for the period after 30/01/2009. It is also submitted that if the Appellant is made to pay duty for the clearances effected during 12/01/2009 to 31/01/2009 (it may be mentioned that there was no clearance during the period from 15/12/2008 to 11/01/2009) for each consignment by debiting from the PLA, the Cenvat Credit already utilized by the Appellant for the said clearances will revive and the Appellant will become entitled to utilize such revived credit for payment of duty for subsequent clearances. It is therefore strictly speaking not a case of clearance of excisable goods without payment of duty but only difference in the mode/manner of payment of duty. Hence, if the Appellant is compelled to pay duty for the clearances effected during 12/01/2009 to 29/01/2009 by paying from PLA/by cash, the Cenvat Credit already utilized will have to be re-credited in the Cenvat Account for subsequent debit for payment of duty for subsequent clearances which means merely a scriptory work without any net revenue implication. The Appellant therefore submits that the confirmation of demand amounting to Rs.92,09,289.00 for the entire period from 05/01/2009 to 14/12/2009 for non-payment of interest of Rs.4,114.00 by 30/01/2009 because of calculation mistake should be set aside.
7. Further the Appellant all along submitted that it was not a case of deliberate non-payment of duty or clearance of excisable goods without payment of duty because of fraud, willful misstatement, suppression of fact etc. but it a simple mistake of calculating interest liability resulting in less payment to the extent of Rs.4,114.00. The fact of non-payment of Central Excise duty amounting to Rs.4,28,029.00 within the stipulated date of 05/12/2008 has been disclosed in the monthly ER-I return for the month of November’ 2008 submitted within the due date. Further the fact that the amount along with the interest paid on 30/01/2009 has also been disclosed in the monthly ER-I return pertaining to the period of January’ 2009. Therefore, it is totally illogical and improper to allege suppression of fact or willful misstatement so as to invoke the extended time limit of the proviso clause of Section 11A of the said Act. The present show cause notice issued after the expiry of fourteen months from the relevant date is not sustainable on the ground of time bar. The Appellant submitted the following case laws in support of their contention:-
(i) CCE Vs. Vapi Paper Mills Ltd. [2009 (234) ELT 538]
(ii) Ventex Syntex Pvt.Ltd. Vs. CCE [2009 (233) ELT 230]
(iii) CCE Vs. Giriraj Industries [2008 (223) ELT 640]
8. Authorized Representative appearing on behalf of the Department reiterated the findings in the impugned order.
9. Heard the Ld.Authorized Representative for the Department and perused the Appeal records.
10. We find that the issue is no more res integra and is squarely covered by the judgement of the Hon’ble Calcutta High Court in the case of M/s. Goyal MG Gases Pvt.Ltd. Vs. Union of India & Others reported in 2017 (8) TMI 1515 – CALCUTTA HIGH COURT, wherein it is categorically held that when Rule 8 (3A) is declared ultra vires by the different High Courts then the Revenue cannot take a different stand contrary to the said judgements. The Hon’ble Court further declared Rule 8(3A) as invalid which is not stayed by the Hon’ble Supreme Court.
11. We find that the Hon’ble Gujarat High Court in the case of Indsur Global Ltd. v. UOI [2014 (310) E.L.T. 833 (Guj.) has declared the words “without utilizing Cenvat Credit” under Rule 8(3A) as ultra vires which means that the assessee can discharge duty by utilizing Cenvat Credit which is what exactly has been done in the instant case by the Appellant.
12. We find that the said judgment has been followed by the Hon’ble Calcutta High Court in the case of Goyal MG Gases Pvt.Ltd. v. UOI cited (supra) which is not stayed by the Hon’ble Supreme Court. The Hon’ble Calcutta High Court in the said case, has declared the provisions of Rule 8(3A) ibid as invalid and further has held that the Revenue cannot take a different stand and parity has to be extended to the assessee.
13. We find that the demand in the instant case has been raised for contravention of Rule 8(3A) ibid restricting utilization of Cenvat credit during the period of default which provision has been declared ultra vires/invalid by Court, hence the demand cannot be sustained and the Appeal, thus, succeed on this count.
14. We accordingly, set aside the impugned order and allow the appeal with consequential relief, if any.
(Dictated and pronounced in the open Court.)
