2012 (7) TMI 836 - AT - Central Excise

Waiver of condition of pre-deposit of duty demand - Availment of benefit of Cenvat credit under Cenvat Credit Rules, 2004 - Held that - Admittedly the appellant has discharged his duty liability on 26-12-2008 though in contravention of Rule 8(3A) of Central Excise Rules by paying excise duty from his Cenvat credit account. However, fact remains that the entire duty liability stands paid to the department on 26-12-2008 i.e. much prior to issue of show cause notice. Thus at this initial stage taking into account the overall facts and circumstances of the case, we are of the view that it is fit case for waiver of condition of pre-deposit of duty demand, interest and penalty. The stay application is therefore allowed and pre-deposit of duty demand, interest and penalty is dispensed with and recovery thereof stayed - Stay granted.

Summary

Issues:
- Waiver of pre-deposit of duty demand
- Interpretation of Rule 8(3A) of Central Excise Rules
- Discharge of duty liability within stipulated time
- Financial constraints leading to unintentional failure in duty payment
- Utilization of Cenvat credit account for duty payment
- Justification for waiver of pre-deposit condition

Analysis:

The case involved an application seeking waiver of the pre-deposit condition of duty demand, interest, and penalty as a pre-condition for hearing the appeal. The appellant, engaged in the manufacture of excisable goods, had failed to deposit the balance amount of excise duty within the stipulated time, as per Rule 8 of the Central Excise Rules, leading to a duty demand of Rs. 29,37,120. The Revenue contended that the appellant did not pay duty on each consignment cleared during the defaulting period from the Cenvat account as required by Rule 8(3A), resulting in an improper discharge of the duty liability.

The appellant argued for the waiver of pre-deposit, stating that the failure to discharge duty liability within the stipulated time was unintentional and due to severe financial constraints. The appellant eventually paid the duty liability by utilizing the Cenvat credit account, which would result in a revenue-neutral situation and avoid unnecessary duplication. The Revenue, however, referred to Rule 8(3A) and maintained that the appellant was required to clear future duty liability from the Cenvat credit account without utilizing the credit until the outstanding duty liability was discharged.

Upon considering the submissions and the record, it was observed that the appellant had paid the entire duty liability before the issuance of the show cause notice, albeit from the Cenvat credit account in contravention of Rule 8(3A). Taking into account the overall facts and circumstances of the case, the Tribunal found it to be a fit case for the waiver of the pre-deposit condition. Therefore, the stay application was allowed, and the pre-deposit of duty demand, interest, and penalty was dispensed with, with recovery thereof stayed. The appeal was directed to be listed in due course for further proceedings.