2012 (12) TMI 547 - AT - Central Excise

Defaulted in payment of duty alleged that there is a violation of Rule 8 (3A) of Central Excise Rules inasmuch as they are strictly prohibited from utilizing CENVAT credit during the default period Held that - Directing the appellant to pay the demanded amount in cash and allowing credit of the said amount (no such order has also been passed by the authorities below) would amount to double payment of duty. However there is clear violation of provisions of Rule 8(3A) of Central Excise Rules - appellant directed to deposit

Summary

Issues:
Violation of Rule 8(3A) of Central Excise Rules regarding utilization of CENVAT credit during default period.

Analysis:
The appellant defaulted in payment of duty amounting to Rs.5,10,597/- for February 2008, which was paid later along with interest. The impugned order treated clearances from February 2008 to November 2008 as non-duty paid, highlighting irregular utilization of CENVAT credit amounting to Rs.18,13,257. The order did not address the credit already utilized for duty payment. The appellant's advocate acknowledged the violation of Rule 8(3A) of Central Excise Rules, which prohibits CENVAT credit utilization during default periods.

The Tribunal noted that directing the appellant to pay the demanded amount in cash and allowing credit would result in double payment of duty. However, there was a clear violation of Rule 8(3A) of Central Excise Rules. Consequently, the Tribunal directed the appellant to deposit Rs.2,00,000/- as penalty within six weeks. Upon compliance, the balance of dues as per the impugned order would be waived, and recovery would be stayed pending the appeal's disposal. The decision aimed to address the violation while preventing unjust double payment of duty, ensuring fairness and compliance with the Central Excise Rules.