2009 (4) TMI 578 - AT - Central Excise

Summary

Issues:
1. Withdrawal of facility to pay duty fortnightly and direction to pay duty on consignment basis.
2. Demand of duty and interest for non-deposit of assessed duty.
3. Entitlement to use Modvat credit account during the period of forfeiture.
4. Liability to pay interest on delayed payments.
5. Imposition of penalties on the manufacturing unit, Managing Director, and Excise Clerk.

Analysis:

Issue 1:
The case involved the withdrawal of the facility to pay duty fortnightly and the direction to pay duty on a consignment basis. The appellants cleared goods during the period of forfeiture by paying duty from the Modvat account. The Revenue contended that duty should have been paid out of the PLA and proposed a recovery of duty. The Tribunal examined the matter and set aside the demand of duty and interest, citing a previous decision that allowed the use of Cenvat credit during such periods without attracting interest and penalty.

Issue 2:
Regarding the demand of duty and interest for non-deposit of assessed duty, the Tribunal acknowledged the delay in payment by the appellants, holding them liable for interest on the delayed payments. The Tribunal rejected the appellants' argument that the duty was already assessed and therefore not subject to interest provisions, emphasizing the need to compensate the Revenue for the loss due to delayed payments.

Issue 3:
The question of entitlement to use the Modvat credit account during the forfeiture period was addressed. The Tribunal referred to a previous decision that clarified the assessee's right to discharge duty liability from the Cenvat credit during such periods without incurring interest and penalty. Consequently, the Tribunal set aside the demand of duty and interest, ruling in favor of the appellants.

Issue 4:
The liability to pay interest on delayed payments was established by the Tribunal, considering the loss to the Revenue due to the delay in duty payment. The Tribunal held the appellants accountable for interest on the delayed payments, rejecting their argument that the duty was already assessed and not subject to interest provisions.

Issue 5:
Regarding the imposition of penalties on the manufacturing unit, Managing Director, and Excise Clerk, the Tribunal found the penalties imposed on the Managing Director and Excise Clerk unwarranted. The Tribunal set aside the penalties on the Managing Director and Excise Clerk, noting the absence of evidence reflecting an intent to evade duty or maintain incorrect records, especially in the case of financial difficulties leading to non-payment of duty.

In conclusion, the Tribunal partially allowed the appeal filed by the manufacturing unit and set aside the penalties imposed on the Managing Director and Excise Clerk. The judgments were pronounced on 8-4-2009.