2008 (8) TMI 735 - AT - Central Excise

Summary

Issues:
1. Appeal against Commissioner (Appeals) order dismissing appellant's appeal.
2. Payment of central excise duty from cenvat account or current account.
3. Interpretation of Rule 8 of the Central Excise Rules.
4. Applicability of notification dated 31-3-2005.
5. Comparison of decisions by Single Member Benches and Larger Bench.

Analysis:

1. The appeal was filed against the order of the Commissioner (Appeals) which upheld the Deputy Commissioner's decision directing the appellant to pay duty from the current account only on a consignment basis for a specific period.

2. The appellant argued that they had the option to pay duty either from the PLA or cenvat account as per sub-rule (4) of Rule 8 of the Central Excise Rules. They relied on the Noble Drugs Limited case and Lloyds Steel Industries Limited case to support their contention.

3. The Revenue contended that on default, duty must be paid from the current account and not from the cenvat account. They cited the Aeon's Const. Products Limited case and SU-VI Pharmaceuticals & Chem. Ltd. case to support their argument.

4. The notification dated 31-3-2005 amended the rule, excluding Rule 3(4) of the Cenvat Credit Rules. The appellant argued that since the amendment was prospective from 1-4-2005, their case should be governed by the previous provision.

5. The Tribunal held that the decisions by Single Member Benches did not correctly interpret the law, as the Larger Bench decision in Noble Drugs Limited case and the Bombay High Court decision in Lloyds Steel Industries Limited case supported the appellant's argument. Therefore, the payment of excise duty from the cenvat credit account was deemed legal, and no additional liability could be imposed on the appellant for default in payment of instalments under Rule 8.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeal in favor of the appellant, emphasizing the legality of paying excise duty from the cenvat credit account as per the provisions in force during the relevant period.