2005 (7) TMI 589 - AT - Central Excise

Summary

Issues: Penalty imposed under Rule 8 of the Central Excise Rules for non-payment of duty from PLA.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the issue revolves around the penalty of Rs. 2,00,000 imposed on the appellants under Rule 8 of the Central Excise Rules. The appellants were penalized because they were debarred from the facility of fortnightly payments and were required to pay duty on a consignment basis by debiting the PLA. The Department contended that the duty should have been paid from the PLA instead of debiting the Cenvat account. The appellants acknowledged this and promptly rectified the payment from the PLA. The appellants argued, through their advocate, that they genuinely believed duty could also be paid through the Cenvat account during that period. However, upon receiving the Show Cause Notice, they immediately paid the duty in the PLA. The Department, represented by Shri N.V.B. Nair, stated that as per Rule 8 of the Central Excise Rules, failure to clear consignments by debiting duty in the PLA would be considered as if the goods were cleared without duty payment, leading to penalties as per the rules.

The Tribunal, after hearing both sides, noted that under Rule 8, clearing goods by debiting the Cenvat account during the period of forfeiting the facility to pay in fortnightly installments should be treated as clearance without duty payment, warranting the invocation of penal provisions. Despite this, considering the appellants' prompt payment into the PLA following the Revenue's notice, the Tribunal reduced the penalty from Rs. 2,00,000 to Rs. 20,000. The Tribunal upheld the penalty modification but rejected the appeal in all other aspects.