2005 (5) TMI 517 - AT - Central Excise

Summary

Issues:
1. Confirmation of duty against the appellants.
2. Utilization of Cenvat credit for payment of duty.
3. Compliance with Rule 3(3) of the Cenvat Credit Rules 2002.
4. Dispute regarding debit entry from Cenvat credit account.
5. Prohibition on utilizing credit earned after clearance of goods.
6. Direction to deposit balance duty amount through PLA.
7. Consideration of penalty deposit as sufficient.

Analysis:

1. The judgment confirms the duty amount of Rs. 1,14,366/- against the appellants along with a personal penalty. The appellant's factory was visited, discrepancies were found, and an amount was debited from their Cenvat credit account as per the insistence of revenue officers.

2. Proceedings were initiated through a show cause notice, resulting in the Joint Commissioner confirming the duty demand. The Commissioner (Appeals) directed the appellants to deposit the amount through PLA, restricting credit utilization post-clearance under Rule 3(3) of the Cenvat Rules 2002.

3. The appellate authority agreed that if duty is paid through PLA, the appellants could re-credit the earlier debited amount from their Cenvat account. The appellants had already deposited Rs. 29,000/- towards duty and penalty based on a stay order by the Commissioner (Appeals).

4. The main dispute revolved around whether the debit entry from the Cenvat credit account during the officer's visit was sufficient for duty payment. The Revenue pointed out the proviso to Rule 3(3), prohibiting credit utilization for clearances made before credit earning.

5. The Rule specifies restrictions on utilizing Cenvat credit earned after goods clearance for prior clearances. The Revenue contended that since clandestine removals occurred before credit earning, the appellants couldn't use the credit for duty discharge.

6. The judgment upheld the Revenue's argument, directing the appellants to deposit the remaining duty through PLA within eight weeks. Once deposited, the earlier debit entry in the Cenvat account could be reversed, as previously suggested by the Commissioner (Appeals).

7. The penalty deposit of Rs. 29,000/- was deemed sufficient under Section 35F. The case was scheduled for compliance verification and final appeal disposal on a future date.