2014 (2) TMI 451 - AT - Central Excise

Payment of duty through CENVAT Credit or PLA - Imposition of Penalty of identical amount - appellant defaulted in payment of duty during the period February, and March, 2008 and the said default was made good on 23.7.08 when the appellant paid the entire duty along with interest - Held that - period involved in the present appeal is admittedly after 23.7.08 i.e. December 2009 to August, 2010. In terms of provisions of Rule 8, the default period would result in assessee s liability to pay duty on consignment basis till the date assessee pays the outstand amount including interest. Admittedly the respondents had paid the amount on 23.7.08 and thereafter he would be entitled to utilize the credit for payment of duty in respect of subsequent clearances - Following decision of Meenakashi Associates vs. CCE, NOIDA 2012 (6) TMI 275 - CESTAT, NEW DELHI - Decided against Revenue.

Summary

Issues:
1. Default in payment of central excise duty for specific periods.
2. Utilization of Cenvat credit for payment of duty.
3. Interpretation of Rule 8(3A) of the Central Excise Rules.
4. Applicability of case laws in determining liability for duty payment.

Analysis:
1. The case involves a dispute regarding the non-payment of central excise duty by the appellant for the periods of February and March 2008, which was subsequently paid along with interest. The issue in the present appeal pertains to the period from December 2009 to August 2010, where the appellant was alleged to have used Cenvat credit for duty payment instead of paying through PLA. The original adjudicating authority confirmed the demand for duty along with interest and imposed a penalty, which was set aside by the Commissioner (Appeals).

2. Rule 8(3A) of the Central Excise Rules is crucial in this case, as it stipulates that if an assessee defaults in duty payment beyond thirty days from the due date, they must pay duty for each consignment at the time of removal without utilizing Cenvat credit until the outstanding amount is paid. The appellant's failure to follow this procedure led to the goods being deemed cleared without duty payment. The Commissioner (Appeals) highlighted the appellant's non-compliance with this rule during the specified periods.

3. The Commissioner (Appeals) referred to relevant case laws, such as CCE vs. Moonlight Alloys Pvt. Ltd. and Meenakshi Associates vs. CCE, to support the decision in favor of the appellant. These cases established that once the outstanding amount is paid along with interest, the prohibition under Rule 8(3A) is lifted, allowing the assessee to resume utilizing credit for duty payment. The Tribunal's decisions emphasized that regular payments out of PLA are not required once the default amount is settled.

4. Ultimately, the Commissioner (Appeals) found no fault in the impugned order and rejected the Revenue's appeal. The judgment underscored the importance of adhering to the provisions of Rule 8 and the significance of timely duty payment to avoid consequences like goods being deemed cleared without duty payment. The case laws cited played a pivotal role in clarifying the liability of the appellant and upholding the decision in their favor.