2014 (1) TMI 784 - AT - Central Excise

Duty paid though Cenvat account not proper Arrears to be recoverable as per Rule 8(4) of cenvat credit rules Waiver of Pre-deposit Held that - The specific provisions of Rule 3(4) and Rule 8(3A) respectively the applicant is liable to pay excise duty and interest without utilizing CENVAT Credit - they have already paid through an amount of Rs.3,82,000 - Appellant is directed to pay 25% of the remaining amount of duty involved in cash/PLA as pre-deposit upon such submission rest of the duty to be waived til the disposal partial stay granted.

Summary

Issues:
- Default in payment of duty beyond the due date
- Applicability of Rule 8(3A) of the Central Excise Rules, 2002
- Treatment of duty paid through CENVAT account as non-payment
- Imposition of penalty
- Financial crisis leading to partial payment through CENVAT
- Interpretation of Tribunal decision in Solar Chemferts Pvt. Ltd. vs. CCE, Thane-I
- Requirement to discharge duty in cash/PLA accounts
- Stay applications filed by the Appellant

Analysis:
The judgment involves two separate appeals filed against the Commissioner(Appeals)s order, which was based on two order-in-originals issued for default in payment of duty. The issue revolves around the interpretation and application of Rule 8(3A) of the Central Excise Rules, 2002. The Commissioner(Appeals) held that the Appellant's failure to pay duty for earlier periods rendered the amounts paid through CENVAT account as non-payment of duty, leading to the imposition of a penalty.

During the proceedings, the Appellant cited financial crisis as the reason for partial payment through CENVAT. The Appellant argued that as per a Tribunal decision in a similar case, double payment of duty on the same goods would occur if the amount utilized in CENVAT credit is not refunded. The Appellant contended that paying again from PLA would result in double payment, emphasizing that they had already paid once through CENVAT.

On the other hand, the Revenue's representative supported the Commissioner(Appeals)'s findings, stating that the Appellants had acknowledged the fault and were required to discharge the duty in cash/PLA accounts as per Rule 8(3A). After hearing both sides, the Tribunal directed the Appellant to pay 25% of the remaining duty amount in cash/PLA within a specified timeframe. Upon compliance, the remaining dues would be waived, and recovery stayed during the appeal's pendency.

In conclusion, the judgment clarifies the obligations of the Appellant regarding duty payment, the consequences of default, and the application of CENVAT credit in such situations. The decision provides a balanced approach by requiring partial payment while considering the Appellant's financial constraints and the potential for double payment of duty.