2008 (9) TMI 635 - AT - Central Excise

Stay/Dispensation of pre-deposit - Held that - The period in dispute in the present case is covered by the Central Excise Rules, 2002 is amended w.e.f. 1-6-2006, whereby the payment on Cenvat account is prohibited during the period of defaults - The Adjudicating Authority in the impugned order held that the applicants are to pay the amount in dispute from the current account and after payment they can take credit in the Cenvat account. In these circumstances, we find no merit in the contention of applicant in respect of waiver of pre-deposit of duty amount - pre-deposit of penalty is waived.

Summary

Issues: Application for waiver of pre-deposit of duty and penalty under Central Excise Rules.

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue revolved around an application for waiver of pre-deposit of duty amounting to Rs. 32,47,856/- and penalty of Rs. 4,00,000/ under the Central Excise Rules. The applicants had failed to deposit duty on due dates, leading to a dispute regarding the mode of payment during the default period. The Revenue contended that the applicants, during the default period, were prohibited from paying duty from the Cenvat account and thus were liable to pay from the current account. The applicants, on the other hand, relied on a decision of the Hon'ble Bombay High Court which allowed payment from the Cenvat credit for goods cleared on a consignment basis during the default period. However, the Tribunal noted that the Central Excise Rules had been amended in 2006, prohibiting payment from the Cenvat account during default periods, rendering the Bombay High Court decision inapplicable. The Adjudicating Authority had directed the applicants to pay the disputed amount from the current account and then re-credit the Cenvat account, leading to the waiver of the pre-deposit of penalty. The Tribunal found no merit in the applicant's contention for a waiver of the duty amount pre-deposit and directed compliance within eight weeks, with a reporting deadline set for November 12, 2008.

This judgment highlights the importance of compliance with the Central Excise Rules regarding the payment of duties and penalties. It clarifies the implications of default in duty payment and the subsequent mode of payment during such default periods. The Tribunal's decision underscores the significance of adhering to the amended rules and regulations, even if prior judicial decisions may suggest otherwise. The case serves as a reminder for taxpayers to stay updated with the latest amendments in the legal framework governing their obligations to avoid penalties and ensure smooth operations within the bounds of the law.