2008 (3) TMI 584 - AT - Central Excise

Payment of duty from Cenvat a/c without having sufficient balance - Held that - The appellant paid the duty subsequently from their Cenvat Account. Admittedly, the appellants had no sufficient balance in the Cenvat Account during the disputed period when the goods cleared without payment of duty. Therefore, they are not entitled to avail the Cenvat credit for the clearance of the good during the disputed period - the Appellant is directed to pay the duty amount from the PLA and, thereafter, the Appellant would be eligible for Cenvat credit to the corresponding amount in their Cenvat accounts - appeal dismissed.

Summary

Issues:
1. Default in payment of duty and utilization of Cenvat credit.
2. Applicability of case laws on forfeiture of facility due to default.

Analysis:
The case involved the appellant, engaged in manufacturing SGCI Insets, Runner & Riser, and Steel Castings, facing allegations of defaulting in duty payment during a specific period. The appellant had paid the defaulted amount later through RG-23 A Part-II Account. The adjudicating authority confirmed the duty demand, interest, and imposed a penalty under Rule 25 of the Central Excise Rules, 2002, which was upheld by the Commissioner (Appeals).

The appellant's advocate cited a Bombay High Court case and a Tribunal decision, arguing for the utilization of Cenvat credit for duty payment in case of forfeiture of facility due to default. However, the Departmental Representative contended that a Tribunal decision in a different case was more relevant, emphasizing that the case laws cited by the appellant were not applicable in the present scenario of duty payment default.

Upon review, the judge found that the appellant had indeed not paid the duty during the disputed period and did not have sufficient balance in the Cenvat Credit Account. As a result, the appellant was deemed ineligible to avail Cenvat credit for goods clearance during that period. Referring to a previous Tribunal case, the judge highlighted that duty demands must be paid in PLA to be eligible for Cenvat credit, reducing penalties in certain aspects due to specific circumstances.

Ultimately, the judge concluded that the appellant must pay the duty amount from the PLA and would then be eligible for Cenvat credit corresponding to that amount in their Cenvat accounts. The appeal was rejected based on the findings and legal interpretations presented during the proceedings.