2003 (10) TMI 513 - AT - Central Excise

Summary

Issues: Challenge to penalty and redemption fine imposed on the appellant.

In this case, the appellant, a manufacturer of aerated water, challenged the penalty imposed and the redemption fine demanded due to default in duty payment. The Deputy Commissioner forfeited their facility of depositing duty on a fortnightly basis for two months as they failed to make full payments from April to July 2000. The appellants used Cenvat credit during the restricted period, claiming ignorance and lack of malicious intent. The Central Excise Officers seized goods from their depot, leading to confiscation and imposition of a penalty by the Joint Commissioner. The appellant's appeal was rejected by the Commissioner (Appeals). The appellant argued that they promptly paid the duty amount in full with interest once notified by the department, but faced delays in crediting the Cenvat account, losing its benefits. They contended that the penalty and redemption fine were excessive.

The learned SDR argued that under Rule 173G(1) of the Central Excise Rules, the appellants were prohibited from using Cenvat credit for duty payment during the forfeited fortnightly payment period. The goods cleared by the appellants were considered to be without payment of duty, making them liable for confiscation and penal action.

The Tribunal considered both arguments and found that the appellants indeed paid duty through the Cenvat credit account during the forfeited period, leading to the goods being deemed cleared without duty payment. Consequently, the Tribunal agreed with the SDR that penalties were warranted. However, acknowledging that the duty was paid in full promptly upon notification, the Tribunal reduced the penalty and redemption fine to Rs. 10,000 each. The appeal was disposed of with this decision.