Customs, Excise and Gold Tribunal - Mumbai
Cce vs Savita Polymers Limited on 23 August, 2006
Equivalent citations: 2007(114)ECC102, 2007ECR102(TRI.-MUMBAI), 2007(208)ELT200(TRI-MUMBAI), 2007[5]S.T.R.22
ORDER T. Anjaneyulu, Member (J)
1. Heard both sides.
2. At this stage of admission of this appeal, merits of the case have also been considered. This appeal involves an amount of Rs. 24,189/-levied towards interest. Normally the discretion is not being exercised in admitting the appeal filed by either side, when the amount is involved below Rs. 50,000/-. In this appeal fled by the Revenue a short intrinsic question of law is involved as such after admitting the appeal, the point involved in it is considered.
3. The Revenue is in appeal aggrieved by the impugned order passed by the Commissioner(Appeals), Mumbai who has set aside the order in original levying interest amount of Rs 24,189/- and penalty of Rs. 8,000/- allowed the appeal filed by the assessee.
4. The case of the department is that the assessee had availed cenvat credit on inputs/capital goods and cleared the said inputs/capital goods as such and had not paid the duty at the time of removal as required under the provisions of Rule 3(4) of Cenvat Credit Rules, 2002 but debited the duty on monthly basis in terms of Rule 8 of Central Excise Rules, 2002 i.e. on 5th of the following months from April, 2002 to March, 2002 which has resulted in delay of payment of duty and loss of interest to the extent of Rs. 24,189/-.
5. The Commissioner (Appeals) in the impugned order in appeal has held as follows:
Rule 8 of Central Excise Rules, 2002 lays down the time and manner of payment. Sub-rule (1) ibid states that -
The duty on goods removed from the factory or warehouse during a month shall be paid by the 5th of the following month ...
It is clear on a plain reading of Sub-rule(1) that it lays down the time and manner of payment of duty on all the goods removed during the month form the factory/warehouse and no distinction is made between the goods which had been manufactured by the assessee (and on which duty is required to be paid under Section 3 of the Act) and the goods on which Cenvat Credit had been token and duty is required to be paid under Sub-rule (4) of Rule 3 of Cenvat Rules, 2002.
Sub-rule (4) of Rule 3 of Cenvat Credit Rules, 2002 as originally enacted ran as follows:
When inputs or capital goods on which Cenvat Credit has been taken, are removed as such form the factory, the manufacturer of the final product shall pay an amount equal to duty of excise which is leviable on such goods at the rates applicable to such goods (on the date of such removal and on the value determined for such goods under Sub-section (2) of Section 3 or Section 4A of the Act, as the case may be) and such removal shall be made under cover of an invoice referred to in Rule 7.
After substitution of the sub-rule vide Notification 13/2003-CE (NT) dated 1.3.2003, the words "on the date of such removal... as the case may be" were deleted. The effect of the change was that after 1.3.2003 the inputs/capital goods could not be re-assessed to duty and only an amount equal to the credit taken was required to be paid. But nowhere the sub-rule lays down the time of such payment to be at the time of clearance.
The interest was demanded under Section 11AB of the Act. The show cause notice worked out the interest from the date of clearance to the date of payment. However, under the said section interest is payable "from the first date of the month succeeding the month in which the duty ought to have been paid." Thus, there was no authority in any case to charge the interest from the date of clearance, as has been done in the impugned order. Accordingly the demand of interest confirmed vide impugned order is not sustainable and in the absence of demand, the penalty also has be to be aside.
6. The learned JDR further draws my attention to the words "when" and "shall" used in the Sub-rule (4) of Rule 3 of Cenvat Credit Rules, 2002 effective from 1.3.2003 connotes that the duty is liable to be paid whenever the inputs or capital goods are removed as such from the factory and they are mandatory in nature. This sub-rule has been substituted vide Notification No. 13/2003-CE (NT) dated 1.3.2003 by deleting the words, "on the date of such removal....as the case may be".
7. The learned JDR submits that originally Sub-rule 4 of Rule 3 of Cenvat Credit Rules, 2003 shows that Whenever inputs or capital goods on which Cenvat Credit has been taken, are removed as such form the factory, the manufacturer of the final product shall pay an amount equal to duty of excise which is leviable on such goods at the rates applicable to such goods (on the date of such removal and on the value determined for such goods under Sub-section (2) of Section 3 or Section 4A of the Act, as the case may be) and such removal shall be made under cover of an invoice referred to in Rule 7. This goes to show that the duty is payable on the same date when the goods are removed. But the above referred notification specifically deleting the words "on the date of such removal ... as the case may be" and consequently there is no specific date of payment of duty remains in the aforesaid clause.
8. The assessee in the instant was having the facility of payment of duty on monthly basis. It can be said that there is no delay in payment of duty. The interpretation as sought by the learned JDR cannot be made applicable when the position of law is clear and vivid. This position has been supported by the following decisions in the case KLRF Textiles v. CCE, Tirunelveli and Grasim Industries Limited v. CCE, lndore wherein it has been held in such circumstances, the interest and penalty are not sustainable. Therefore, I do no see any irregularity in the impugned order passed by the Commissioner (Appeals). Consequently, the appeal filed by the Revenue is rejected and cross objections are allowed filed by the assessee.
(Pronounced in the Court)