Jayaswals Neco Ltd. v. Commissioner Of Central Excise, Raipur

 [Order per : V.K. Agrawal, Member (T)]. - In this appeal, filed by M/s. Jayswals Neco Ltd., the issue involved is whether interest can be demanded from them.

2. Shri B.L. Narsimhan, learned Advocate, submitted that the appellants manufacture Pig Iron and scrap of iron; that as per the requirement of the Central Excise Rules, they are required to pay duty on the goods cleared in the first fortnight by 20th of the month and for the goods cleared during the second fortnight of the month by 5th of next month; that in the months of August, October and November, 2000, the appellants were not able to pay Central Excise duty on time and they were, therefore, directed to make payment of duty on consignment basis instead of fortnightly basis; that this direction was in force for a period of two months from 19-12-2000 to 18-2-2001; that, accordingly, they started paying duty on consignment basis mostly by debiting the duty amount in PLA; that, however, the small amount of duty was paid by debiting in Cenvat Credit account; that the Commissioner, in the impugned order, therefore, has demanded the interest for delayed payment @ 24 per cent per annum for the period from 19-12-2000 to 20-5-2002 as part of the duty was paid from Cenvat Credit account. Learned Advocate, further, submitted that Cenvat Credit account is also considered as account current for the purpose of payment of duty; that there is no restriction for utilising the Cenvat Credit for payment of duty under the Cenvat Credit Rules at all and hence the payment of duty through Cenvat Credit was in order. He also contended that the Commissioner has clearly held, in the impugned order, that the removals were not without payment of duty, but, were on payment of duty by wrong mode; that thus this is not a case of non-payment or short payment of duty and as such the provisions of Section 11A of the Central Excise Act or the interest provisions under Section 11AA or 11AB of the Act, would have no application. He, finally, mentioned that as the removal of goods was not without payment of duty, the interest cannot be charged under Rule 173G of the Central Excise Rules; that Rule 173G(1)(d) has no application as the said sub-rule refers to the “due date”; that this sub-section is applicable only when the fortnightly payment of duty is being followed; that as in the present matter duty was paid on consignment basis, interest under sub-rule 173G(1)(d) cannot be demanded. He also mentioned that as the appellants paid around Rs. 7 crore in cash through PLA towards duty, the small amount of Rs. 31 lakh (approx.), utilised from Cenvat, should not warrant imposition of interest; that moreover, this is a case of bona fide mistake.

3. Countering the arguments, Shri Virag Gupta, learned DR, submitted that sub-rule (e) of Rule 173G(1) of the Central Excise Rules, clearly provides that if the manufacturer defaults in payment of duty on due dates, he shall forfeit the facility to pay the dues in instalments for a period of two months and during this period, he shall be required to pay excise duty for each consignment by debit to the account current referred to in Clause (b); that the account current, referred to in sub-rule (b), is only the PLA and not Cenvat Credit account; that as the facility of payment of duty on fortnightly basis has been forfeited, the appellants were required to deposit the duty on consignment basis through PLA only and not through Cenvat Credit account; that as they have paid the duty during the material period, through Cenvat Credit also, the same will be regarded as default in payment of duty and interest shall be liable to be paid by the appellants under sub-rule (d) of Rule 173G(1) of the Central Excise rules. He emphasised that the Commissioner has given a specific finding in the impugned order to the effect that “so long as the actual revenue is not credited in Government account by cash payment through TR-6 Challans, the undue financial accommodation to the defaulter continues and under that circumstances interest has to be charged for delayed payment”.

4. We have considered the submissions of both the sides. The admitted facts are that on account of default made by the appellants in discharging their duty liability on fortnightly basis on due dates, facility of payment of duty by instalment had been withdrawn for two months. It is also admitted fact that during the said period of two months, they had discharged the duty through Cenvat Credit account, which is not permissible under the provisions of sub-rule (e) of Rule 173G(1) of the Central Excise Rules. The Commissioner has clearly held that the appellants did pay the demand on consignment basis, but the mode of duty of payment was wrong. Once, the duty has been debited in Cenvat Credit, which was not permissible during the said period of two months, it will amount to non-payment of duty. We agree with the findings of the Commissioner that the default of not making the payment on the due date, remains continued during the said period and the interest is payable by the appellant under the provisions of sub-rule (d) of Rule 173G(1) of the Central Excise rules. The said sub-rule speaks of payment of duty by the due date. In the present matter, the due date is the date of clearance of the goods and on that date, the duty has been paid through Cenvat Credit, which was not available to the appellants. Accordingly, we find no reason to interfere with the impugned order. The appeal is, accordingly, rejected.