2014 (8) TMI 363 - AT - Central Excise

Waiver of predeposit of duty - Central Excise duty paid in cash/PLA under Rule 8 (3A) of the Central Excise Rules, 2002 - applicant already reversed the entire amount from CENVAT account which is in consonance with Rule 8(3A) - applicant submitted that it is incurring huge loss as evident from the Income Tax letter as well as the company has been declared layoff, there is no means to pay further amount as predeposit - Held that - Karnataka High Court in the case of Manjunatha Industries Ltd. (2013 (4) TMI 534 - KARNATAKA HIGH COURT) held that in the case of default of discharging monthly duty, provisions of Rule 8(3A) of Central Excise Rules for utilizing CENVAT account amount is not with reference to arrears for the entire credit lying in the account. It is observed that the assessee has to pay excise duty through account current for each consignment at the time of removal. Hence the applicant is required to pay the duty by cash/PLA in respect of duty for the defaulting period. After considering the submission of the learned counsel that the applicant-company is incurring huge loss and it is declared lay off and the partial deposit made by them, applicant directed to make predeposit - Conditional stay granted.

Summary

Issues: Application for waiver of predeposit of duty under Rule 8(3A) of the Central Excise Rules, 2002.

Analysis:
1. The applicant sought waiver of predeposit of duty amounting to Rs. 11,11,194/- along with interest and penalty for the Central Excise duty on goods cleared between March 2011 to July 2011, to be paid in cash/PLA under Rule 8(3A) of the Central Excise Rules, 2002.

2. The applicant's counsel argued that the entire amount had been reversed from the CENVAT account in compliance with Rule 8(3A). Additionally, a partial payment of Rs. 2,36,106/- had already been made, citing financial difficulties due to significant losses and layoff status. Reference was made to a previous Tribunal case granting partial stay on predeposit.

3. The Revenue's representative contended that the Karnataka High Court decision in Manjunatha Industries case established that duty under Rule 8(3A) must be paid through account current for each consignment at the time of removal. Citing Tribunal and Madras High Court decisions, it was argued that the applicant should deposit the entire duty amount along with interest based on settled precedents.

4. Upon review, it was noted that the Karnataka High Court ruling clarified that duty payment under Rule 8(3A) is specific to each consignment at the time of removal, requiring cash/PLA payment for default periods. Considering the applicant's financial situation and partial payment, the Tribunal directed a further predeposit of Rs. 3,00,000/- within eight weeks, with balance dues waived upon compliance, and recovery stayed during the appeal period.