2011 (7) TMI 476 - AT - Central Excise

Cenvat Credit - duty demand - default in discharge of monthly duty liability by the due date in terms of the provisions of Rule 8(1) of the Central Excise Rules, 2002 and this default continued even beyond the period of 30 days from the due date during which, in terms of the provisions of Rule 8(3A), the Assessee forfeits the facility of payment of duty in monthly instalments and utilisation of cenvat credit for payment of duty - Held that - cenvat credit in respect of GTA services and renting of immovable property services availed by the appellant has been taken rightly. The requirement of pre-deposit of duty and cenvat credit demand, interest and penalty is, waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal. The stay application is allowed.

Summary

Issues: Default in discharge of monthly duty liability, wrong availment of cenvat credit, penalty under Rule 25 of the Central Excise Rules, 2002 vs. penalty under Section 11 AC, waiver of pre-deposit for hearing the appeal.

Analysis:

1. Default in discharge of monthly duty liability: The appellants, manufacturers of batteries chargeable to central excise duty, availed cenvat credit but defaulted in discharging monthly duty liability within the stipulated period. The default continued beyond 30 days, leading to the forfeiture of the facility of payment of duty in monthly instalments and utilization of cenvat credit for duty payment. A show cause notice was issued for recovery of duty, cenvat credit, interest, and penalties.

2. Wrong availment of cenvat credit: Allegations were made regarding the wrong availment of cenvat credit, including the transfer of an amount from the cenvat credit account to PLA. The appellants contested these allegations, arguing that certain credits were rightfully taken and any errors were rectified promptly.

3. Penalty under Rule 25 vs. Section 11 AC: The initial penalty imposed under Section 11 AC was reduced on appeal, citing that non-discharge of duty liability and non-payment during the forfeiture period may attract penalties under Rule 25 of the Central Excise Rules, 2002. The appellants challenged this decision in the present appeal.

4. Waiver of pre-deposit for hearing the appeal: The appellants requested a waiver of the pre-deposit requirement for hearing the appeal, contending that they had already paid the demanded duty, rectified any errors in cenvat credit availing, and had a strong prima facie case. The Departmental Representative opposed the waiver, emphasizing the seriousness of the alleged violations.

5. Judgment: The Tribunal, after considering submissions from both sides and reviewing the records, found that the demanded duty had been paid by the appellants. They also acknowledged that certain cenvat credit availed by the appellants was legitimate. Consequently, the Tribunal granted the appellants' plea for waiver from the pre-deposit requirement for hearing the appeal. The requirement of pre-deposit of duty, cenvat credit demand, interest, and penalty was waived, and recovery thereof was stayed until the appeal's disposal. The stay application was allowed, and the order was pronounced on 29.07.11.