2013 (8) TMI 208 - AT - Central Excise

Interest on defaulted payment - Held that - discharge of duty liability by the appellant through the cenvat account which had balance. Despite the fact that the said duty liability on the finished goods cleared by the appellant has been discharged by them by utilising the cenvat credit and hence government was for all practical purposes was not deprived of the duty - Following decision of SOLAR CHEMFERTS PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, THANE-I 2011 (6) TMI 640 - CESTAT, MUMBAI - Decided in favour of assessee. Quantum of penalty - Held that - appellant has violated the provisions of Central Excise Rules, 2002 by utilising the cenvat credit for discharge of duty liability when he was debarred to do so, having defaulted in making payments as per the Central Excise Rules, 2002 - Decided against assessee.

Summary

Issues:
Waiver of pre-deposit of interest and penalties under Rule 25 and Rule 27 of the Central Excise Rules due to default in payment under Rule 8 of the Central Excise Rules, 2002.

Analysis:

1. Interest and Penalty Imposition:
The appellant utilized cenvat credit during a period of default in payment under Rule 8 of the Central Excise Rules, 2002. The Revenue Authorities issued a notice for recovery and penalties. The appellant argued that the duty liability was discharged through the cenvat account, and the amount was later paid in cash. Referring to the case of Solar Chemferts Pvt. Ltd., the appellant contended that interest and penalty should not apply. The Tribunal agreed, citing that duty was paid during the default period, and interest should be paid until the default is rectified. The Tribunal ruled in favor of the appellant regarding interest payment.

2. Penalty under Rule 25:
Regarding the penalty under Rule 25 of the Central Excise Rules, the Tribunal found that since the duty liability was discharged from the cenvat account, albeit improperly during the default period, the penalty was not applicable. Citing the decision in the case of Saurashtra Cement Ltd., the Tribunal set aside the penalty under Rule 25.

3. Penalty under Rule 27:
The Tribunal upheld the penalty imposed under Rule 27 of the Central Excise Rules. The appellant violated the rules by utilizing cenvat credit for duty liability during the default period. The Tribunal found the penalty of Rs. 5000 justified under Rule 27. The appeal challenging this penalty was rejected.

4. Final Decision:
The Tribunal rejected the appeal challenging the penalty under Rule 27 but allowed the appeal challenging the imposition of interest and penalty under Rule 25. The appellant's appeal was disposed of accordingly, with the decision pronounced in court.

This detailed analysis addresses the issues of waiver of pre-deposit of interest and penalties under Rule 25 and Rule 27 of the Central Excise Rules due to default in payment under Rule 8 of the Central Excise Rules, providing a comprehensive overview of the judgment delivered by the Appellate Tribunal CESTAT AHMEDABAD.