C.C.E & Indore vs M/S. R.R. Ispat Ltd

[Arising out of Order-in-Appeal No. 71/RPR-I/2006 dated 05.04.2006 by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Raipur].

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

C.C.E & Indore

.Appellants

Vs.

M/s. R.R. Ispat Ltd. .Respondent

Appearance:

Shri R.K. Grover, DR for the Appellant

Ms. Priyanka Goel, Advocate for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

Date of Hearing: 17.09.2015

FINAL ORDER NO. 52950/2015-EX(DB)

Per B. Ravichandran:

The Revenue is in appeal against the order of Ld. Commissioner (A) dated 05.04.2006.

2. The brief facts of the case are that the respondent cleared excisable goods from their factory during the month of January 2006. They were liable to pay Central Excise duty of Rs.1,53,14,146/- with educational cess of Rs.3,06,283/-. However, they have paid only Rs.1,22,52,128 towards duty and Rs.2,45,043/- towards educational cess. Since the short paid amount of duty was not discharged before 05.02.2006 the Assistant Commissioner issued the order on 29.03.2006 directing the respondent to forfeit the facility to pay duty on monthly basis under Rule 8 (3A). Against the said order the respondent filed the appeal and the Ld. Commissioner (A) in the present impugned order held that on merits the lower authority is correct. However, he set aside the order as the same was passed without issuing any notice or hearing the assessee. Aggrieved by the said order the Revenue is in appeal before us.

3. In the appeal it is pleaded that the provisions of Rule 8 (3A) is clearly attracted and there is no need for following any detailed procedure before forfeiture of the facility. The Revenue pleaded that an order which was upheld on merits cannot be set aside for the procedural infirmity. It was further contended that the Ld. Commissioner (A) should have remanded the matter to the original authority to decide the case afresh.

4. The respondent have filed the cross objection against finding of the Ld. Commissioner (A) regarding the correctness of original authority order in terms of Rule 8 (3A). The respondent stated that the department on realizing that due duty has not been discharged by the assessee should have taken remedial action of demand in terms of section 11A of the Central Excise Act 1944. Proceedings under Rule 8 without any notice of hearing is legally untenable. They have further contented that there was an unintentional clerical error on their part in discharging the correct duty liability. This should not be the reason for withdrawal of monthly payment in terms of Rule 8 (1).

5. During the oral submission the Ld. AR reiterated the grounds of appeal and stated that Commissioner (A) should not have set aside the original order as he found the same correct on merits. The Ld. Counsel for the respondent stated that when there was a short payment of duty the proper procedure would be to issue demand notice under section 11(A) and to decide the matter. The facility under Rule 8(1) was withdrawn without any notice and without hearing their side. Hence he pleaded that the Ld. Commissioner (A) order of setting aside the lower authoritys order is correct on this ground.

6. Heard both the sides and considered the appeal papers.

7. Rule 8(3A) of Central Excise Rules 2002 for the relevant period is reproduced as under:

If the assessee defaults in payment of duty by the date prescribed in sub-rule (2) and the same is discharged beyond a period of thirty days from the said date, then the assessee shall forfeit the facility to pay the duty in monthly installments under sub-rule (1) for a period two months, starting from the date of communication of the order passed by the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise as the case may be, in this regard or till such date on which all dues including interest thereof are paid, whichever is later, and during this period notwithstanding anything contained in sub-rule (4) of rule 3 of Cenvat Credit Rules, 2004, the assessee shall be required to pay excise duty for each consignment by debit to the account current and in the event of any failure, it shall be deemed that such goods have been cleared without any payment of duty and the consequences and penalties as provided in these rules shall follow.

8. The original order states that the respondent was liable to pay a Central excise duty of Rs.1,53,14,168/- but had paid the duty of Rs.1,22,52,128/-. There is no clarity as to whether the nonpayment of duty is after the correct self assessment made under Rule 6 by the assessee or is there a short payment of correct duty not assessed by the assessee. The Ld. Commissioner in his appellate order states that lower authority is well within his rights to forfeit the facility even if the assessment has been done incorrectly and there is short payment of duty on that count. We find such conclusion is without support of the legal provisions. If there is an incorrect assessment resulting in short payment of duty the correct course of action is to demand such short payment in terms of Section 11 A. Such short payment due to incorrect assessment cannot automatically result in action under Rule 8 (3A). Though the respondent admitted that clerical error resulted in their short payment it is not clear whether duty liability and payment were reflected in the assessment documents.

9. Considering the background of the case and the nature of order issued by the original authority and the reasoning given by the Ld. Commissioner (A) to set aside the original order we find no reason to interfere with the impugned order. Accordingly, we dismiss the appeal filed by the Revenue. C.O. also disposed off.

(Operative part of the order pronounced in the open court)

(B. Ravichandran) (Ashok Jindal) Member (Technical) Member (Judicial)

Bhanu

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E/2153/2006-EX(DB)