2014 (1) TMI 725 - AT - Central Excise

Dientitlement for utilization of credit - Waiver of Pre-deposit Held that - The appellant had by committing default in payment of duty for a certain period disentitled themselves to utilization of CENVAT credit - Under Rule 8(3A) of the Central Excise Rules 2002 they were liable to pay duty on each consignment during the period of default from PLA without utilizing CENVAT credit. - There was no prima facie case for the appellant inasmuch as the entire demand on the appellant stems from operation of the Rules Assessee directed to deposit Rupees Twenty Lakhs as pre-deposit upon such submission rest of the duty to be stayed till the disposal Partial stay granted.

Summary

Issues: Application for waiver and stay of dues adjudged against the appellant.

Analysis:
1. The appellant sought waiver and stay regarding the demand of Rs. 32,74,670/- towards duty and education cess for the period from August 2007 to April 2008, along with interest on duty and a penalty of Rs. 3.5 lakhs. The appellant had defaulted in payment of duty, disentitling themselves to utilize CENVAT credit for the disputed period. As per Rule 8(3A) of the Central Excise Rules 2002, duty was required to be paid from PLA without utilizing CENVAT credit during the default period. However, the appellant paid duty by illegally utilizing CENVAT credit, resulting in the goods being considered non-duty-paid. The original authority confirmed the duty demand against the appellant, requiring payment from PLA and allowing re-credit of the irregularly utilized CENVAT credit. The penalty imposed was reduced by the appellate authority, leading to the current proceedings.

2. Upon hearing both parties, the Tribunal found no prima facie case for the appellant as the demand was a result of Rule operation. The appellant lacked a defense concerning Rule 8(3A). The written submissions and cited decisions focused on the penalty issue, with no relevant defense for the duty payment demand from PLA. The appellant's plea regarding the proprietor's medical condition and financial constraints lacked supporting evidence for the current period, although the Tribunal considered the plea.

3. The Tribunal directed the appellant to predeposit Rs. 20,00,000/- within six weeks without utilizing CENVAT credit. Compliance was to be reported to the Dy. Registrar by a specified date. Upon due compliance, waiver and stay were granted for the penalty imposed on the appellant, along with the remaining duty and interest amount.

This judgment highlights the importance of adhering to legal requirements in duty payment, the consequences of irregular utilization of credits, and the Tribunal's consideration of pleas for waiver and stay based on specific circumstances presented during the proceedings.