2008 (2) TMI 698 - AT - Central Excise

Cenvat credit - sub-rule 3A of Rule 8 of the Central Excise Rule, 2002 - Held that - the appellants have not till date paid the requisite amount by cash or from PLA which is the requirement under the cited sub-rule 3A of Rule 8 - the appellants have failed to discharge their duty liability inasmuch as they have paid the same through Cenvat Credit which is not permissible under the cited sub-rule 3A of Rule 8. Hence, we have no hesitation in upholding the demand of duty and interest thereon. However, subject to the appellants paying the duty amount in cash/PLA, they are allowed to reverse the Cenvat credit and utilize the same for future clearance in accordance with law - As regards the penalty, we are of the view that ends of justice shall be met if the same is reduced to ₹ 1.00 lakh - appeal dismissed.

Summary

Issues:
1. Default in paying excise duty by the appellants.
2. Validity of the Assistant Commissioner's order.
3. Applicability of the Larger Bench's decision.
4. Challenge to the Assistant Commissioner's order.
5. Permissibility of paying duty through Cenvat Credit.
6. Imposition of penalty.

Analysis:

1. The appellants failed to pay excise duty amounting to Rs. 49,35,300 for the month of March, 2006, by the required deadline. Consequently, the jurisdictional Assistant Commissioner issued an order directing the appellants to pay duty for each consignment for a period of two months.

2. The appellants argued that the Assistant Commissioner's order was void as it was passed without hearing them. However, the Tribunal found that the appellants did not appeal the Assistant Commissioner's order, making it final. The Tribunal referenced a decision from the Hon'ble High Court of Punjab & Haryana to support this conclusion.

3. The appellants relied on a decision by a Larger Bench in a different case to support their argument that they paid duty using Cenvat Credit. The Department argued that this decision was not applicable to the current case due to an amendment in the relevant rule. The Tribunal agreed with the Department's stance, emphasizing that the appellants did not follow the proper appeal procedure.

4. Since the appellants did not pay the required duty amount in cash or from PLA as mandated by the rule, the Tribunal upheld the demand for duty and interest. The Tribunal clarified that the appellants could reverse the Cenvat credit and use it for future clearance if they paid the duty amount as required.

5. Regarding the penalty imposed on the appellants, the Tribunal decided to reduce it from Rs. 5.00 lakhs to Rs. 1.00 lakh, stating that this adjustment would serve the ends of justice. The appeal was rejected except for the penalty reduction, and a stay petition was disposed of accordingly.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Kolkata highlights the issues raised, the arguments presented by both parties, and the Tribunal's reasoning behind its decision on each issue.