2013 (5) TMI 319 - AT - Central Excise

Availment of cenvat credit - Scrapped capital goods During the visit the officers found that the amount in respect of clearances of scrapped capital goods on 4.2.2008 & 5.2.2008 had not been paid. Accordingly duty demand/penalty arise as the appellant have intention to evade the duty. Appellant contested the imposition of penalty Held that - The appellant do not dispute that the scrapped capital goods cleared on 4.5.2008 were cenvat credit availed and an amount equal to the duty on the transaction value was payable in terms of Rule 3(5A) of the Cenvat Credit Rules and also the amount payable in terms of Rule 3(5A) was liable to be paid along with the duty payable on the finished goods by 5th of the next month. Therefore, the amount payable under Rule 3(5A) in respect of the consignment of the scrap cleared on 4.2.2008 & 5.2.2008 was liable to be paid by 5th March, 2008 and as such, just because this amount was not paid immediately on clearance, it would not be correct to say that the appellant had intention to evade the payment. In view of this, imposition of penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11 AC of the Cenvat Credit Rules is not sustainable. The appeal is allowed.

Summary

Issues:
1. Availing cenvat credit on scrapped capital goods.
2. Payment of duty on cleared scrapped capital goods.
3. Imposition of penalty under Rule 15(2) of Cenvat Credit Rules.

Analysis:
1. The appellant, a manufacturer of various products chargeable to central excise duty, availed cenvat credit on inputs and capital goods as per Cenvat Credit Rules, 2004. They cleared scrapped capital goods on specific dates, for which duty was payable under Rule 3(5A) of the Cenvat Credit Rules. The central excise officers found the duty amount unpaid during a visit to the factory.

2. The Asstt. Commissioner confirmed the demand and imposed a penalty for non-payment of duty on the cleared scrapped capital goods. The Commissioner (Appeals) upheld this decision, leading to an appeal challenging the penalty imposition.

3. The appellant argued that there was no intention to evade payment as the duty amount was paid from the cenvat credit account before the due date. They cited Rule 8 of the Central Excise Rules, which allows payment by the 5th of the next month and includes the duty payable under Cenvat Credit Rules. The appellant contended that the penalty imposition was unjustified.

4. The Tribunal analyzed the case and noted that the duty on scrapped capital goods was payable by a specific date, which was met by the appellant's payment before the due date. The Tribunal found no intention to evade payment as the duty was paid timely. Consequently, the imposition of the penalty under Rule 15(2) of Cenvat Credit Rules was deemed unsustainable, and the Commissioner (Appeals)'s decision was set aside, allowing the appeal in favor of the appellant.