Shri Vishwanath Packaging vs Commissioner of Central Excise

This appeal arises from a decision of the Customs, Excise & Service Tax Appellate Tribunal dated 2 April 2014 on an application for modification of an earlier order dated 6 May 2011 which has been passed on an application for waiver of pre-deposit. By the impugned order, the Tribunal has dismissed the application for modification. During the period in dispute, the allegation is that the appellant failed to deposit the monthly duty liability in terms of rule 8(1) of the Central Excise Rules. Hence, under rule 8(3A), the appellant was required to pay the duty consignment-wise and only through the PLA since the period of default was beyond 30 days from the due date. However, the appellant discharged the duty liability by availing of Cenvat credit which was not permissible. The Additional Commissioner by an order dated 29 January 2010 confirmed the duty demand of Rs. 7,90,954/- together with interest and imposed a penalty in the like amount besides a personal penalty of Rs. 20,000/- on the partner. In appeal, the Commissioner (Appeals) upheld the order of adjudication on 29 June 2010 save and except for the penalty which was reduced to Rs. 2,00,000/-.

In appeal before the CESTAT an order was passed on 6 May 2011 on an application for waiver of pre-deposit directing the appellant to deposit an amount of Rs. 5,26,305/- within a period of three months from the date of the order. However, the Tribunal observed that once this amount was paid through the PLA, the amount which had been paid through Cenvat credit would be re-credited to that account. The Tribunal held that under rule 8(3A), the appellant having failed to discharge the monthly liability within the stipulated period of 30 days as prescribed by rule 8(1), it had forfeited the facility for the payment of duty through Cenvat credit account. Hence, under rule 8(3A), the appellant was required to pay the duty consignment-wise and only through the PLA and without utilising the Cenvat credit. However, the quantum of deposit was reduced to Rs. 5,26,305/- on the ground that the appellant had already deposited an amount of Rs. 2,64,249/- through the PLA. This order was passed on 6 May 2011.

The appellant did not comply with the order of deposit. However, the appellant filed an application for modification of the stay on 1 September 2011. In the application for modification, the only ground which was made out was that the appellant had deposited the whole of the duty amount either through PLA or Cenvat credit and since the Unit had been closed, it had no source of income and the amount was deposited late due to financial constraints. The application for modification remained pending for nearly three years and has been disposed of by the impugned order dated 2 April 2014.

During the course of the hearing before the Tribunal, as the submissions would indicate, the only submission was that in another order passed by the Tribunal on 12 June 2013 on a miscellaneous application for modification, certain relief had been granted. This was duly considered by the Tribunal in paragraph 3 of its impugned order. The Tribunal noted that in the earlier order, the appellant had been directed to deposit an amount of Rs. 5 lakhs as against which it had deposited an amount of Rs. 6,25,194/- together with interest and it was in these circumstances that the Tribunal observed that if this fact was drawn to its attention, it would not have directed a pre-deposit of a further amount of Rs. 5 lakhs. On the other hand, in the present case, there was no deposit of any amount towards the pre-deposit. The Tribunal has relied on a judgment of the Madras High Court in Unirols Airtex Vs. The Assistant Commissioner of Central Excise Coimbatore Division IV, The Superintendent of Central Excise and The Inspector of Central Excise Coimbatore Division IV, and held that a period of two years had elapsed but no deposit had been effected.

We have duly considered the order which has been passed on the application for pre-deposit. This appeal has been filed, it may be noted, against the order passed on the application for modification. We find the orders which had been passed by the Tribunal both on the original application as well as on the modification application are fair and proper. A prima facie finding has been recorded that there was a breach on the part of the appellant to comply with the provisions of rule 8(1), which mandates that the duty has to be paid by the fifth day of the following month. Rule 8(3A) thereafter stipulates that if there is a default in payment of duty beyond 30 days from the due date, then notwithstanding anything contained in sub-rule (1) and sub-rule (4) of rule 3 of the Cenvat Credit Rules, 2004, the assessee has to pay duty for each consignment including interest without utilizing the Cenvat credit.

Admittedly, in the present case, it was the Cenvat credit which was utilized by the appellant despite the default. The Tribunal has directed the appellant to deposit an amount of Rs. 5,26,305/- with a further qualification that upon this deposit, the Cenvat credit would be re-credited to the account. We have also noted above that the only submission which was raised before the Tribunal, was based on an order passed in a miscellaneous application dated 12 June 2013. The Tribunal has furnished cogent ground for holding that the order on the miscellaneous application in some other matter had no application for the simple reason that in that case the appellant had deposited much more than what was directed to be deposited by way of pre-deposit.

In this view of the matter, the appeal will not raise any substantial question of law. Though the order of pre-deposit was passed as far back as on 6 May 2011, the appellant has not deposited any amount by way of duty on the ground that the miscellaneous application remained pending. The Tribunal extended the time for effecting the deposit by a period of four weeks and directed that the matter be listed for compliance on 6 May 2014. In the interest of justice, we extend the time for effecting compliance by a further period of two weeks from today. Leaving it open to the appellant to do so, we dismiss the appeal as it does not give rise to any substantial question of law.