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2011 (3) TMI 877 - AT - Central ExcisePenalty under Rule 173Q read with Rule 25 - Utilization of cenvat credit - The period in this case is prior to 01.06.06 when statutory provisions were amended so as to bar utilization of cenvat credit for payment of duty in such a situation - Therefore held that the assessee was entitled to utilize credit for payment of duty in the light of the Tribunal s Larger Bench decision in the case of Noble Drugs Ltd. Vs. CCE Nasik 2007 -TMI - 49051 - CESTAT WEST ZONAL BENCH MUMBAI - However as regards penalty since there has been violation of Rules by not paying duty on goods on consignments basis it is justified - However having regard to the totality of facts and circumstances of the case reduce the penalty to Rs. 3, 500/- The appeal is thus partly allowed.
Issues: Recovery of duty, imposition of penalty under Central Excise Rules, 2001 and 2002, utilization of cenvat credit for duty payment, violation of Rules, reduction of penalty.
In the judgment by the Appellate Tribunal CESTAT, CHENNAI, the issue revolved around the recovery of duty amounting to Rs. 36,21,543/- imposed on the assessees by the Commissioner of Central Excise, along with interest and penalties under Rule 173Q read with Rule 25 of the Central Excise Rules, 2001, and Rule 25 of the Central Excise Rules, 2002. The demand arose due to the forfeiture of the facility of paying duty on a fortnightly basis, leading to a dispute regarding the utilization of cenvat credit for duty payment. The Tribunal noted that the relevant period was before 01.06.06, when statutory provisions were amended to restrict the use of cenvat credit for duty payment. Citing the Tribunal's Larger Bench decision in the case of Noble Drugs Ltd. Vs. CCE, Nasik - 2007 (215) ELT 500 (Tri.- LB), it was held that the assessee was entitled to utilize credit for duty payment. However, the Tribunal found a violation of Rules due to non-payment of duty on consignments basis, justifying the penalty. Despite this, considering the overall circumstances, the penalty was reduced to Rs. 3,500/-. The judgment highlights the importance of statutory provisions and case law in determining the entitlement to utilize cenvat credit for duty payment. It underscores the significance of compliance with Rules and the imposition of penalties for violations. The decision showcases the Tribunal's authority to review penalties based on the totality of facts and circumstances in each case, ensuring a fair and just outcome.
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