2010 (10) TMI 140 - AT - Central Excise

Demand Default in payment of duty - Notification No. 13/2006-C.E., a defaulting assessee liable to pay excise duty for each consignment at the time of removal, without utilizing CENVAT credit, until the date for payment of the outstanding amount including interest thereon - Since the assessee continued to utilize CENVAT credit instead of paying duty through PLA, the demand requires to be sustained

Summary

Issues:
1. Failure to pay duty within due date as per Central Excise Rules, 2002.
2. Utilization of CENVAT credit for duty payment against rules.
3. Imposition of penalties under Section 11AC and Rule 25 of Central Excise Rules, 2002.

The judgment pertains to a case where the assessee failed to pay duty monthly within the due date as required by Rule 8 of the Central Excise Rules, 2002. The facility to pay duty through CENVAT credit account was withdrawn, and duty was to be paid only through PLA from a specified date. Despite this, the assessee continued to use CENVAT credit for duty payment from a certain period, leading to a demand of Rs. 58,47,741/- by the Department. The Commissioner confirmed the demand, interest, and imposed penalties under Section 11AC and Rule 25 of the Central Excise Act, 1944. The appeal was made against this decision.

The Tribunal noted that as per an amendment to the Central Excise Rules, 2002, a defaulting assessee must pay excise duty for each consignment at the time of removal without utilizing CENVAT credit until the outstanding amount is paid. Since the assessee persisted in using CENVAT credit instead of paying through PLA, the demand was deemed valid and upheld by the Tribunal. Thus, the demand for the amount was sustained based on the rules and the amendment.

Regarding the penalties imposed, the Tribunal decided to set aside the penalty under Section 11AC citing precedents from cases like Krishna Chemicals v. CCE, Ahmedabad and Sai Packaging Industries v. CCE, Chennai. However, the penalty under Rule 25 was upheld but reduced to Rs. 5,00,000/- in line with previous Tribunal orders. Consequently, the appeal was partly allowed with modifications in the penalties imposed, as per the Tribunal's decision based on legal precedents.

In conclusion, the judgment upheld the demand for duty payment due to the misuse of CENVAT credit by the assessee. It also modified the penalties imposed, setting aside one penalty under Section 11AC while reducing the penalty under Rule 25. The decision was made based on the legal provisions and precedents cited during the proceedings.