2006 (9) TMI 380 - Commission - Central Excise

Issues Involved:
1. Default in payment of Central Excise duty.
2. Forfeiture of the facility to pay duty in installments.
3. Use of Cenvat credit account during the period of forfeiture.
4. Recovery of duty, interest, and imposition of penalty.
5. Application for settlement and immunity from interest, penalty, and prosecution.

Detailed Analysis:

1. Default in Payment of Central Excise Duty:
The main applicant, M/s. Orissa Industries Ltd., manufactures Refractory Bricks/Materials. It was found that the applicant defaulted in paying Central Excise duty amounting to Rs. 9,67,200/- for the second fortnight of March 2002. The duty was not paid within 30 days from the due date, leading to further actions by the authorities.

2. Forfeiture of the Facility to Pay Duty in Installments:
Due to the default, the Deputy Commissioner of Central Excise and Customs forfeited the facility of paying duty in installments and directed the applicant to pay duty consignment-wise by debiting from the PLA for two months. This order was issued on 13-11-2002.

3. Use of Cenvat Credit Account During the Period of Forfeiture:
Despite the order, the applicant used the Cenvat credit account to pay duty amounting to Rs. 19,29,928/- during the forfeiture period. According to Rule 8(4) of the Central Excise Rules, 2002, this act was deemed as removal without payment of duty, prompting the issuance of a Show Cause Notice.

4. Recovery of Duty, Interest, and Imposition of Penalty:
The adjudicating authority confirmed the demand for recovery of Rs. 19,29,928/-, ordered the recovery of interest under Section 11AB, and imposed a penalty of Rs. 10,000/- under Rule 25 of the Central Excise Rules, 2002. The applicant appealed against this order but also filed a settlement application admitting the additional liability.

5. Application for Settlement and Immunity from Interest, Penalty, and Prosecution:
The applicant sought an early resolution of the dispute through a settlement application, admitting the entire amount of duty confirmed and stating that this amount had already been deposited. The applicant requested immunity from interest, penalty, and prosecution, citing financial crisis and lack of mala fide intention.

Commission's Findings and Final Order:
- The Commission found that the applicant had made a true and full disclosure of their duty liability and had cooperated fully.
- The Commission noted that the applicant did not gain financially by debiting the Cenvat account and that similar cases had been granted immunity.
- The Commission settled the case, confirming the duty amount of Rs. 19,29,928/- already adjusted.
- The applicant was granted immunity from payment of interest, fine, penalty, and prosecution under Section 32K(1) of the Central Excise Act, 1944.
- The immunity would be withdrawn if the applicant failed to comply with the conditions specified in the settlement order.

This judgment illustrates the application of settlement provisions under the Central Excise Act, 1944, and highlights the importance of full disclosure and cooperation in obtaining relief from penalties and interest.

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