2009 (9) TMI 715 - AT - Central Excise

Summary

Issues:
1. Liability for duty payment utilizing Cenvat credit.
2. Default in payment of duty and subsequent demand for cash payment.
3. Interpretation of Rule 8(3A) of Central Excise Rules, 2002.
4. Prima facie case for waiver of dues.

Analysis:
1. The case involved a situation where the applicant was required to pay duty for a specific month and utilized Cenvat credit for a significant portion of the amount. However, due to a delay in arranging the remaining balance in cash, a default situation arose, leading to a demand for cash payment for a subsequent period. The Tribunal considered the adequacy of the Cenvat credit balance and the reason for the delay in cash payment in determining the liability for duty payment utilizing Cenvat credit.

2. The Tribunal referred to the order of the Commissioner, which highlighted the requirement to pay duty through the Account current (PLA) during the default period as per Rule 8(3A) of the Central Excise Rules, 2002. The Commissioner noted that the delay in payment beyond the stipulated period led to the demand for cash payment for clearances made during the default period, despite the availability of Cenvat credit. The Tribunal analyzed the Commissioner's findings regarding the reasons for the default and the applicability of Rule 8(3A) in such circumstances.

3. The interpretation of Rule 8(3A) was crucial in determining the obligations of the assessee regarding duty payment during the default period. The Commissioner emphasized the strict interpretation of statutes and the requirement to adhere to the provisions of the rule, irrespective of the reasons for the delay in payment. The Tribunal considered the arguments presented by the assessee regarding the pressure from Range Officers and the availability of Cenvat credit, ultimately assessing whether the demand for cash payment was justified under the rule.

4. After evaluating the facts and submissions, the Tribunal concluded that the applicant had a prima facie case for waiver of the dues as per the impugned order. Considering the adequacy of the Cenvat credit balance and the circumstances leading to the default in cash payment, the Tribunal decided to waive the pre-deposit of duty, interest, and penalty, staying the recovery of the dues until the appeal's disposal. This decision was based on the Tribunal's assessment of the applicant's justification for the default and the interpretation of Rule 8(3A) in the context of the case.