2009 (6) TMI 791 - AT - Central Excise

Penalty - removal of excisable goods by debiting the Cenvat account instead of PLA account during the period 5-9-07 to 12-9-07

Summary

Issues:
1. Delay in payment of duty under Rule 8 of the Central Excise Rules, 2006 (CER).
2. Utilization of Cenvat credit for payment of duty.
3. Imposition of penalty under Rule 25 of the CER.

Analysis:
1. Delay in Payment of Duty: The appellants, engaged in manufacturing iron and steel castings, paid duty for July 2007 on 12th September 2007 instead of the prescribed date of 5th August 2007 under Rule 8 of CER. They utilized Cenvat credit for payment instead of debiting the PLA for goods removed during 5-9-07 to 12-9-07. Subsequently, they paid the amount from PLA on 18-12-07 with interest. The original authority appropriated the duty, interest, and imposed a penalty of Rs. 1,00,000 under Rule 25 of CER, 2002.

2. Utilization of Cenvat Credit: During the appeal, it was argued that no penalty could be imposed under Rule 25 of CER for the violation. The appellants cited precedents like Saurashtra Cement Ltd. and Condor Power Products P. Ltd. to support their case. It was contended that Rule 27 of CER, which allows a maximum penalty of Rs. 5,000, was more applicable. The Tribunal considered the violation of utilizing Cenvat credit instead of debiting the PLA and the subsequent payment of duty and interest. Relying on the Saurashtra Cement Ltd. case, the Tribunal held that the penalty under Rule 25 was not sustainable. Instead, a maximum penalty of Rs. 5,000 under Rule 27 CER was deemed justified.

3. Imposition of Penalty under Rule 25: The Tribunal analyzed the nature of the violation and the intent behind the delay in payment of duty. It noted that the appellants had disclosed the transactions in their returns and attributed the delay to financial crises. The Tribunal emphasized that there was no intention to evade duty payment, and the penalty under Rule 25 was not warranted. Following the precedent set in Saurashtra Cement Ltd., the Tribunal reduced the penalty to Rs. 5,000, allowing the appeal in part.

In conclusion, the judgment addressed the issues of delay in duty payment, utilization of Cenvat credit, and the imposition of penalty under Rule 25 of the CER. It emphasized the importance of considering the circumstances, intent, and relevant rules in determining the appropriate penalty, ultimately reducing it to Rs. 5,000 based on the applicable provisions and precedents.