2014 (1) TMI 266 - AT - Central Excise

Delay in deposit cenvat credit - Default of duty liability under Rule 8 of Central Excise Rules Waiver of Pre-deposit Held that - Relying upon Solar Chemferts Pvt. Ltd. vs. CCE, Thane 2011 (6) TMI 640 - CESTAT, MUMBAI payment of duty through Cenvat credit account during the period of default will earn only interest liability and there is no requirement of payment of duty through PLA and in CCE vs. Saurashtra Cement Ltd. 2010 (9) TMI 422 - GUJARAT HIGH COURT - for penal liability the provisions of Rule 27 get attracted and Rule 25 has no applicability the appellant has deposited the entire duty through Cenvat credit account therefore condition of pre-deposits waived till the disposal stay petition allowed unconditionally upon submission of Rs. 5000 as penalty Stay granted.

Summary

Issues: Default in duty liability payment, penalty imposition, applicability of Rule 8 of Central Excise Rules, Tribunal decisions on payment methods, penalty provisions under Rule 27, conflicting tribunal decisions, stay petition approval.

In this case, the main issue revolves around the default on the part of the appellant in disposing of duty liability as per Rule 8 of Central Excise Rules, leading to a delay in duty deposit through the Cenvat account. The Revenue directed the appellant to pay via PLA and imposed a penalty equivalent to the late duty deposit. The Tribunal referred to the decision in Solar Chemferts Pvt. Ltd. vs. CCE, Thane, stating that duty payment through Cenvat credit account during default incurs only interest liability, not PLA requirement. Additionally, based on the CCE vs. Saurashtra Cement Ltd. case, penal liability falls under Rule 27, not Rule 25.

The Tribunal acknowledged that the appellant had deposited the full duty via the Cenvat credit account, waiving the pre-deposit condition. Following the Tribunal and Gujarat High Court rulings, the appellant was directed to pay a penalty of Rs.5,000, the maximum under Rule 27 of Central Excise 2002. Despite contrary decisions in cases like Godrej Hershey Ltd. vs. CCE, Bhopal, and CCE, Indore vs. Kapil Steel Ltd., which required duty payment with interest and Cenvat credit recrediting in case of default, the Tribunal favored the appellant's stance due to conflicting views. Consequently, the stay petition was unconditionally granted, contingent on the appellant depositing the penalty within four weeks.

The judgment highlights the importance of adopting the view favoring the assessee when faced with conflicting interpretations of the law. The matter was scheduled for compliance verification on a specified date, emphasizing the need for timely adherence to the directives. The decision was pronounced in open court, ensuring transparency and accountability in the legal process.