Quarterly payment of duty and return filing - is entitlement of full exemption under notification 8/2003-CE mandatory?
WE received this mail from a Netizen -
"The second proviso to rule 8 of CER, 2002 reads -
"Provided further that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the duty on goods cleared during a quarter of the financial year shall be paid by the 6th day of the month following that quarter, if the duty is paid electronically through internet banking and in any other case, by the 5th day of the month following that quarter, except in case of goods removed during the last quarter, starting from the 1st day of January and ending on the 31st day of March, for which the duty shall be paid by the 31st day of March.
Explanation. 1. - For the purposes of this proviso, it is hereby clarified that an assessee shall be eligible, if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year, computed in the manner specified in the said notification, did not exceed rupees four hundred lakhs.
Explanation. 2. - The manner of payment as specified in this proviso shall be available to the assessee for the whole of the financial year."
I commenced manufacturing of excisable goods last July and although entitled to avail SSI exemption of Rs. 1.5 Crores opted for payment of normal rate of duty by availing CENVAT credit. This option was exercised by me in terms of clause 2(i) of notification 8/2003-CE dated 01.03.2003.
For the quarter ending September, I paid the duty due on the 5 th of October and filed a quarterly return thereafter in terms of rule 12 of CER, 2002. For the subsequent quarter, also I adopted the same manner of duty payment and return filing.
The jurisdictional authorities have now objected to such payment of duty and return filing and are contemplating taking action under section 11 of the CEA, 1944 and issuance of a show-cause notice. It is their contention that since I was not availing the benefit of SSI exemption but paying normal rate of duty by availing Cenvat, I am not entitled to benefit of paying duty on quarterly basis and so also in filing the return. They are alleging that I have committed a default in payment of duty and are referring to sub-rules 3, 3A and 4 of rule 8 of CER, 2002 to initiate action against me.
I tried to impress upon them that the proviso in rule 8 and a similar one appearing in rule 12 only refers to "an assessee being eligible to avail of the SSI exemption" and does not warrant an assessee to compulsorily avail the exemption viz. Nil rate for Rs.1.5 Crores. Even otherwise, the payment of normal rate of duty by foregoing the full exemption was made possible by clause 2(i) of notification 8/2003-CE and this would tantamount to my availing the exemption notification 8/2003-CE, I pleaded.