2005 (10) TMI 339 - AT - Central Excise

Summary

Issues:
Appeal against order withdrawing fortnightly duty payment facility; Default in duty payment for specific fortnights; Dispute over utilization of Cenvat credit for duty payment; Refund claim for excess interest paid; Jurisdictional authority's rejection of refund claim; Commissioner (Appeals) decision on excess interest refund; Allegation of late duty payment and interest liability due to erroneous order; Legal implications of forfeiture order on duty payment method.

Analysis:
The case involved an appeal by the Revenue against the withdrawal of the fortnightly duty payment facility due to defaults in duty payment for specific fortnights. The appellants contested the withdrawal, citing instances of timely payment and challenging the forfeiture based on two occasions of default. The High Court ruled in favor of the appellants, quashing the forfeiture order. Subsequently, a dispute arose over utilizing Cenvat credit for arrears payment, leading to a refund claim for excess interest paid.

The Revenue contended that the appellants deliberately delayed duty payments with the intention to pay later with interest. However, the appellants argued that the delayed payments were a result of the erroneous forfeiture order, which forced them to pay duty consignment-wise instead of utilizing Cenvat credit. The Commissioner (Appeals) allowed the refund claim, emphasizing the impact of the unlawful order on the appellants' financial burden.

The Tribunal analyzed the situation, considering the High Court's ruling on the illegal forfeiture order and the department's refusal to accept Cenvat account payments. It concluded that the department's actions directly contributed to the delayed arrears payment and resultant interest liability. Therefore, the excess amount collected due to the unlawful order had to be refunded to the appellants. The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal.

In summary, the judgment addressed issues related to duty payment defaults, Cenvat credit utilization, excess interest refund claim, and the impact of an erroneous forfeiture order on duty payment methods. The decision highlighted the responsibility of the department in causing financial liabilities to the appellants and affirmed the refund of excess amounts collected unjustly.