2011 (1) TMI 1075 - AT - Central Excise

CENVAT Credit denied - Show Cause Notice was issued to the Appellants on the ground that for the month of November, 2006 Appellants filed monthly return on 5-12-2006 showing payment of duty Held that - As Appellants had not paid duty on due dates therefore the Appellants were debarred from utilizing CENVAT credit for subsequent clearances - Appeal is dismissed

Summary

Issues:
Appeal against penalties imposed under Section 11AC of the Central Excise Act for failure to deposit appropriate duty on due dates and subsequent use of CENVAT credit for clearances.

Analysis:
The Appellants, engaged in the manufacture of paper and paper boards under the CENVAT Credit Scheme, filed an Appeal against penalties imposed for not depositing duty on time. The Revenue's case was based on the Appellants' failure to deposit duty on due dates, leading to subsequent clearances using CENVAT credit, which was deemed impermissible under Rule 8(3)A of Central Excise Rules.

The Appellants did not dispute the factual aspect of failing to pay duty on time but argued that there was no prohibition on paying duty from the CENVAT account despite the delay. On the other hand, the Revenue contended that the Appellants' actions showed an intention to evade duty payment by filing monthly returns indicating payment from P.L.A. even when there was no balance in the account, leading to a bar on utilizing CENVAT credit for subsequent clearances as per Rule 8(3)A.

The judgment highlighted Rule 8(3)A, stating that if an assessee defaults in duty payment beyond 30 days from the due date, they must pay duty for each consignment at the time of removal without using CENVAT credit until the outstanding amount is paid. As the Appellants had not paid duty on time, they were prohibited from using CENVAT credit for subsequent clearances. The court found no fault in the impugned order, as the Appellants had shown payment in monthly returns without actually paying, leading to the dismissal of the Appeal.