2013 (3) TMI 404 - AT - Central Excise

Waiver Pre-deposit of duty, interest & Penalty - failure to pay duty within prescribed time - The department noticing default, intimated the appellant that if he failed to deposit the balance amount of duty, he would have to clear the goods by paying excise duty through PLA account in cash. Appellant while pressing for the waiver of pre-deposit of duty, interest and penalty has contended that that instead of paying excise duty in cash he has paid the same through his Cenvat credit and hence liability has been discharged and there is no need for insisting on the pre-deposit of amounts as a pre-condition to hearing of appeal. Held that - The purpose behind the condition of pre-deposit of the duty demand, interest and penalty by the assessee as a pre-condition of hearing of his appeal is to secure the interest of the Revenue. In the instant case admittedly the excise duty liability has been discharged by the appellant through his Cenvat credit account though as per the Rules, he was required to pay the excise duty in cash but the fact remain that excise duty has been paid. Therefore, taking into account overall facts and circumstances of the case, we find it to be a fit case where the condition of pre-deposit should be waived.

Summary

Issues: Application for waiver of pre-deposit of duty demand, interest, and penalty as a pre-condition of hearing of appeal.

Issue 1: Duty Demand and Payment Default
The appellant, engaged in manufacturing excisable items, failed to fully discharge excise duty liability for goods cleared in June and September 2008. The jurisdictional office notified the appellant of the shortfall in duty payment, leading to a subsequent show cause notice for duty demand totaling Rs. 43,10,050. The Adjudicating Authority confirmed this duty demand, requiring payment in cash through PLA account due to the violation of Rule 8(1) of the Central Excise Rules.

Issue 2: Arguments for Waiver of Pre-Deposit
The appellant's counsel argued for the waiver of pre-deposit, contending that the duty demand was confirmed based on a technical violation of Rule 8(3)(A) as the appellant used Cenvat credit instead of cash through PLA account. It was asserted that the excise duty liability had been discharged, thus no justification existed for insisting on pre-deposit of duty demand, interest, and penalty.

Issue 3: Respondent's Position and Rule Interpretation
The respondent, citing Rule 8(3)(A) of the Central Excise Rules, emphasized that the appellant's use of Cenvat credit instead of cash for duty payment constituted a clear violation of the rule. The respondent argued that the impugned order was justified, and there was no basis for dispensing with the pre-deposit condition.

Judgment and Analysis
The Tribunal considered the purpose of pre-deposit as safeguarding the Revenue's interest. Despite the technical violation of Rule 8(3)(A), the excise duty had been paid by the appellant through Cenvat credit. The Tribunal noted that directing the appellant to deposit the confirmed duty with interest would result in a corresponding credit entry in the Cenvat account, maintaining revenue neutrality. Therefore, based on the overall circumstances, the Tribunal found it appropriate to waive the pre-deposit condition. The stay application was allowed, and the pre-deposit requirement for duty demand, interest, and penalty was dispensed with. The appeal was to proceed in due course.