Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/Case Law/2013-14/1967

Whether Rule 8(3A) is invocable even if non payment of excise duty was due ignorance as regards dishonor of cheque?
Case:-KUWER INDUSTRIES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NOIDA
 
Citation:- 2013 (295) E.L.T. 415 (Tri. - Del.)

 

Brief facts:-The appellants company is registered under Central Excise Rules, 2002 as manufacturer of excisable goods. The total excise duty payable by the appellant for the goods cleared from his unit in July, 2009 was Rs. 14,07,357/-. He adjusted the duty liability to the tune of Rs. 10,13,750/- against the Cenvat credit available in his account. Thus, there was a shortfall of excise duty payable to the extent of Rs. 3,93,607/-. The appellant issued cheque No. 514314, dated 1-9-2009 for Rs. 3,93,607/- drawn on Punjab National Bank, in favour of the Revenue, for payment of unpaid excise duty for the month of July, 2009. The cheque, however, was dishonored by the Bank. It is the case of the appellant that he was not informed of dishonor of the cheque either by the Bank or by the Department. On coming to know of this fact on 2-2-2010, the appellant paid the duty amount of Rs. 3,93,607/- and interest amounting to Rs. 25,234/- for 180 days was paid on 7-5-2010.
It is alleged that during the period August, 2009 to December, 2009, the appellant adjusted the excise duty on the goods cleared from his unit against his Cenvat credit and the amount of duty short paid was paid within 30 days of respective clearances.
The Commissioner, Central Excise, Noida was of the view that since the duty payable for the clearances made in the month of July amounting to Rs. 3,93,607/-, was not paid within 30 days of its becoming due, in view of Rule 8(3A) of Central Excise Rules, 2002, the appellant/applicant was supposed to pay the excise duty on the goods cleared subsequent to the default in cash irrespective Cenvat credit available in his account. Thus, by adjusting the excise duty payable against the Cenvat credit, the appellant has violated the Rule 8(3A) of the Central Excise Rules and committed a default.
Accordingly, a show cause notice dated 3-9-2010 was issued to the appellant. The appellant contested the show cause notice and after giving due hearing to the appellant, the Adjudicating Authority vide impugned Order dated 27-9-2011 disallowed the Cenvat credit amounting to Rs. 1,10,61,274/- utilized by the appellant and ordered the said amount to be demanded and recovered in cash in terms of provisions contained in Rule 8(3A) of the Central Excise Rules, 2002 read with Section 11A of the Central Excise Act, 1944. It was further ordered that interest on the above amount be also demanded and a penalty of Rs. 1 lakh was imposed on the appellant.
Feeling aggrieved by the aforesaid order, the appellant preferred the instant appeal wherein he moved the stay application seeking waiver of condition of pre-deposit of the adjudged demand, interest thereupon and the penalty.
Appellant’s contention:- Ld. Counsel for the appellant contended that the appellant has suo motu paid the deficiency of excise duty amounting to Rs. 3,93,607/- vide cheque No. 514314, dated 1-9-2009 issued in favour of the Revenue drawn on Punjab National Bank. Unfortunately, the cheque was dishonored but this fact was not brought to the notice of the appellant, which resulted in making good the shortfall of excise duty with interest. However, the balance excise duty of Rs. 3,93,607/- along with interest for 180 days was paid on 2-2-2010 and 7-5-2010 respectively. Ld. Counsel contends that there was no intention on the part of the appellant to avoid payment of excise duty and the delay has been caused because the factum of dishonor of cheque was not brought to the notice of the appellant either by the Revenue or by the Bank. Therefore, the appellant could not be penalized for delay. It is further submitted that since the appellant has already paid the balance excise duty and availed of Cenvat credit in respect of the subsequent clearances of excisable items asking him to make payment of the demand with interest would result in double taxation. As such, the order-in-appeal is not sustainable. Thus, ld. Counsel has prayed for waiver of the condition of pre-deposit of demand, interest thereon and the penalty.
Respondent’s contention:- Ld. Departmental Representative refuting the arguments drew the attention to Rule 8(3A) of the Central Excise Rules and submitted that a plain reading of the Rule would show that once the assessee has failed to pay the excise duty beyond thirty days from the due date, the assessee is required to pay excise duty on all clearances in cash till the excise duty due is paid with interest. It was further submitted that in the instant case despite of having committed default in making payment of arrears of excise duty, within 30 days of its becoming due, the appellant instead of paying the excise duty on the subsequent clearances in cash, availed of credit from Cenvat credit account, which amounts to violation of Rule 8(3A) of the Rules. As such, the order-in-appeal cannot be faulted. Learned Departmental Representative further submitted that even after committing the default in relation to payment of excise duty for the month of July, the appellant further committed default for the months of August to December, 2009. Thus, there is no case made out for waiver of condition of pre-deposit.
Reasoning of judgment:- The bench considered the rival submissions and perused the impugned order. It is undisputed that the cheque for payment of balance excise duty for the month of July amounting to Rs. 3,93,607/- issued on 1-9-2009 was dishonored. Therefore, prima facie, the aforesaid cheque, which was dishonored for whatsoever reasons, cannot be taken as the payment of excise duty. Admittedly, the arrears of excise duty were paid on 2-2-2010 i.e. after a delay of 180 days from the date on excise duty became due and the interest thereon was deposited much later i.e. on 7-5-2010. Thus, there is a clear default in payment of excise duty for a period more than 30 days. As such, Rule 8(3A) of the Central Excise Rules, 2002 would come into play, which clearly provides that if the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in Rule 8(3A), the assessee shall, pay excise duty for each consignment at the time of removal, without utilizing the Cenvat credit. Admittedly, in this case, the appellant has availed of Cenvat credit in violation of Rule 8(3A) of Central Excise Rules, therefore, prima facie, the Adjudicating Authority has rightly disallowed the Cenvat credit adjustment against the excise duty payable and raised the demand for the excise duty on subsequent consignments removed without making good the shortfall in excise duty for the month of July, 2009 with interest.
In view of the above, the bench did not find prima facie case for waiver of the condition of pre-deposit of demand. Accordingly, the appellant is directed to deposit the duty demand of Rs. 1,10,61,274/- with interest within 8 weeks from today. Condition of penalty of Rs. 1 lakh imposed on the appellant is however, dispensed with. It is clarified that in the event of appellant depositing the amount in terms of the order, Cenvat credit entries debited against the adjustment of excise duty in contravention of Rule 8(3A) of the Central Excise Rules shall be reversed. In the event of deposit, the recovery shall stand stayed. The stay application is disposed of.
 
Decision:- Pre-deposit ordered.
Comment:- The gist of this case is that the provisions of Rule 8(3A) of Central Excise Rules that states that if the assessee defaults in payment of duty beyond thirty days from the due date, excise duty is payable in cash for each consignment at the time of removal, without utilizing the Cenvat credit are very strict. Hence, even if the short payment was made unintentional or was due to ignorance of the fact that the cheque for payment of excise duty had been dishonored then also the provisions of Rule 8(3A) come into play.



 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com