2006 (9) TMI 329 - AT - Central Excise

Summary

Issues:
Defaulted payment of duty for November and December 2002, validity of Assistant Commissioner's order, utilization of Cenvat credit, change in law from 1-4-2003, penalty imposition.

Analysis:
The appellant defaulted on duty payment for November and December 2002, leading to the Assistant Commissioner's order forfeiting certain facilities. The order required duty payment on a consignment basis and prohibited availing Cenvat credit until dues were cleared, valid until the dues were paid or for two months. The appellant complied with this order, paying duty only in PLA until 5-6-2003, accumulating Cenvat credit of Rs. 7,28,220 by 31-3-2003.

Following a change in the law on 1-4-2003, the appellant believed they could utilize the accumulated credit for duty payment in addition to PLA payments. However, the Assistant Commissioner's order under the rules applicable until 31-3-2003 was deemed valid even after the law change, requiring duty payment only in PLA from 1-4-2003 to 5-6-2003 without utilizing Cenvat credit. The learned SDR argued that the Assistant Commissioner's order blocking Cenvat credit was valid until all dues were cleared.

The Tribunal noted the liberalization of the law from 1-4-2003, making the blocked credit available for utilization from 5-6-2003 once all defaulted dues were cleared. Considering this, the duty demand was set aside, and the appellant was directed to pay applicable interest on the utilized credit within 15 days. The penalty imposed was also revoked, with the Tribunal deeming the appellant's actions not mala fide in light of the changed rules.

In conclusion, the Tribunal set aside the duty demand, directed the appellant to pay interest on the utilized credit, and revoked the penalty. The appeal was disposed of accordingly.