2007 (1) TMI 20 - AT - Central Excise

Demand Department alleged that appellant had violated the provision of sub-rules(4) of Rule of CE Rules, 2001 and defaulted the payment in due time on fortnightly basis After considering all the fact authority allow the appeal

Summary

Issues:
Appeal against Order passed by Commissioner (Appeals) regarding alleged violation of provisions of Central Excise Rules, 2001 related to fortnightly payment and subsequent recovery of Central Excise duty from PLA account.

Analysis:

1. Violation of Provisions of Central Excise Rules, 2001:
The appellant, engaged in the manufacture of man-made fabrics, was alleged to have violated sub-rule (4) of Rule 8 of Central Excise Rules, 2001 by defaulting on fortnightly duty payments. The Department issued a show cause notice proposing to forfeit the fortnightly payment benefit and recover duty from PLA account. The appellant contended that duty was paid along with interest under sub-rule (3) of Rule 8, believing it allowed clearance of goods using deemed credit. However, another show cause notice was issued for recovery from PLA account, leading to an Order-in-Original confirming duty recovery and imposing penalty and interest.

2. Legal Interpretation and Precedents:
The appellant relied on the principle of "Lex non curat de minimis" based on a decision of the Gujarat High Court, arguing that the benefit of fortnightly payment should not be denied when duty and interest were paid. The Commissioner (Appeals) dismissed the appeal citing delays. The Tribunal observed multiple defaults in duty payments during specific periods but noted procedural lapses in confirming duty twice on the same goods. Reference was made to decisions of Gujarat High Court and Bombay High Court regarding duty discharge and Cenvat account treatment.

3. Tribunal Decision and Rationale:
After considering submissions and records, the Tribunal found the forfeiture of monthly duty payment facility justified due to repeated delays. However, it highlighted the procedural error in confirming duty twice on the same goods. The Tribunal concluded that duty demands should not be upheld if duty was discharged as required during the period of forfeiture. Citing relevant case laws, the Tribunal set aside the lower authority's order, stating no further duty demands were warranted, consequently nullifying the penalty as well.

4. Final Verdict:
The Tribunal allowed the appeal, emphasizing the importance of correct duty discharge procedures and adherence to legal precedents. The judgment was pronounced on 19-1-2007, providing clarity on the interpretation of Central Excise Rules and the application of relevant court decisions in resolving duty payment disputes effectively.