Rule 8(3) deals with the case of defaulter in payment of duty within 30 days from the due date and in case of default the goods cleared will be treated as not suffered any duty incidence and the assessee will have to pay consignment wise duty in cash without using Cenvat credit. The board circular says the default amount is a confirmed demand and action under section 142 of Customs Act for attachment and auction should be initiated in order to recover the dues.
Simultaneously there is always wrong utilisation of Cenvat credit and non payment of duty throgh Cash. Here comes into picture the Section 11A of the Central Excise Act which stipulates for non payment of duty a SCN to be issued and to be adjudicated.
No doubt Section prevails over rule and circulars therefore, it appears that raising demand ios a better option but few arguments are there that by raising demand you are converting confirmed demand into a dispute and delaying recovery proceedings.
Kindly comment on this dilemma.
Dated: - 21-08-2014 By: - Pradeep Khatri
We understand that you are referring a wrong Rule 8(3) whereas the position you are discussing is mentioned under Rule 8 (3A) of Central Excise Rules, 2002 as amended from time to time and it has been Substituted vide Notification No. 19/2014 - Central Excise (N.T.), dated 11th July, 2014,. Please go through this notification.
Earlier it was read as :-
“1[(3A) If the assessee defaults in payment of duty beyond thirty days from the due date, as prescribed in sub-rule (1), then notwithstanding anything contained in said sub-rule (1) and sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall, pay excise duty for each consignment at the time of removal, without utilizing the CENVAT credit till the date the assessee pays the outstanding amount including interest thereon; and in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow.] ”
After amendment vide above Notification, it is now read as :
[(3A) If the assessee fails to pay the duty declared as payable by him in the return within a period of one month from the due date, then the assessee is liable to pay the penalty at the rate of one per cent. on such amount of the duty not paid, for each month or part thereof calculated from the due date, for the period during which such failure continues .
Explanation.- For the purposes of this sub-rule, 'month' means the period between two consecutive due dates for payment of duty specified under sub-rule (1) or the first proviso to sub-rule (1) , as the case may be .]
Now this dilemma has been removed. Further, if you need any clarification on this matter, please do contact us.