2013 (11) TMI 591 - HC - Central Excise

Utilisation of Cenvat credit - Compounded Levy Scheme Assessee opted to pay fix duty in terms of capacity of their induction furnaces hot steel re-roller units - Held that - The case put against the assessee in the show cause notice clearly indicates that the demand, penalty and interest on the demand is only on the ground of discharge of duty liability on the final products covered under compounded levy scheme after 1.4.2000 through Cenvat Credit account - Such a debit through Cenvat credit account cannot be faulted with and there is no need for imposition of penalty and interest as Cenvat Credit Rules specifically indicate utilization of legit credit availed for discharge of duty liability There was no fault with the mode of payment of excise duty by the respondents - Cenvat account of the respondents had sufficient credit and they discharged their duty liability through the same instead of making payment through PLA - there is neither loss to the revenue nor there is evasion of duty Decided against the revenue.

Summary

Issues:
Appeals under Section 35G of the Central Excise Act, 1944 against an order of the Customs, Excise and Service Tax Appellate Tribunal regarding the payment of excise duty through Cenvat Credit Account.

Analysis:
The respondents, engaged in manufacturing non-alloy steel ingots, opted for the Compounded Levy Scheme and paid a fixed duty based on the capacity of their induction furnaces. The department contended that duty should only be paid through Personal Ledger Account (PLA) and not through Cenvat Credit Account. The Adjudicating Authority confirmed demands against the respondents and imposed penalties. However, the Appellate Authority allowed the appeals of the respondents, stating that excise duty liability under the Compounded Levy Scheme could be discharged through Cenvat credit. The Tribunal upheld this view, setting aside the penalties and interest imposed by the Adjudicating Authority.

The department argued that the respondents were required to pay duty only through PLA and not through Cenvat Credit Account. It was claimed that using Cenvat credit did not discharge the duty liability. The department sought the reversal of the Appellate Authority's orders and restoration of the original order. However, it was acknowledged that there was no duty evasion or revenue loss.

The Tribunal's findings highlighted that the duty liability on final products under the Compounded Levy Scheme could indeed be discharged through Cenvat Credit Account. The Tribunal concluded that the respondents had legitimately debited their Cenvat credit for duty payment, which was permissible under the Cenvat Credit Rules. As there was no dispute regarding the eligibility of the credit availed, the mode of payment through Cenvat Credit Account was deemed appropriate.

Overall, the appeals were dismissed as the appellate authorities found no fault with the respondents' method of paying excise duty through the Cenvat Credit Account. The Tribunal emphasized that there was no revenue loss or duty evasion, ultimately leading to the dismissal of the appeals.