2015 (5) TMI 911 - HC - Central Excise

Debarment orders - Utilization of wrongful credit - Imposition of penalty - Held that - Appellant did not dispute before the CESTAT that their were defaults in payment of duty in respect of several fortnights and also did not dispute that they utilised credit in violation of debarment orders issued under the Central Excise Rules, namely, orders dated 31.01.2002 and 24.09.2002. Despite these admitted infractions and consequent violation of the rules, the Tribunal was charitable enough to allow credit to be adjusted towards duty at the time of clearance of final products on the premise that it would otherwise lead to the payment of double duty by the appellant. - Tribunal has even otherwise reduced the penalty to only ₹ 1 lac - Decided against assessee.

Issues:
1. Challenge to orders dated 28.10.2004, 06.07.2011, and 15.03.2013 passed by various authorities.
2. Forfeiture of facility of deferred payment of duty.
3. Availing deemed credit and utilising it for payment of duty.
4. Show cause notices demanding duty and penalty.
5. Appeal before Commissioner (Appeals) and Customs, Excise and Service Appellate Tribunal.
6. Rectification application filed by the appellant.
7. Consideration of legal pleas and provisions by the Tribunal.
8. Dispute over defaults in payment of duty and utilisation of credit.
9. Adjustment of credit towards duty at the time of clearance.
10. Penalty imposition for violation of debarment orders.

1. Challenge to Orders:
The appellant contested orders from 2004, 2011, and 2013 by various authorities regarding the forfeiture of deferred payment of duty and the utilization of deemed credit for duty payment. The appellant was directed to pay duty on a consignment basis for specific periods.

2. Forfeiture of Deferred Payment:
The Deputy Commissioner ordered the forfeiture of deferred payment of duty due to violations by the appellant. This led to the appellant being required to pay duty on a consignment basis for specified periods, restricting the use of deemed credit.

3. Availing and Utilizing Deemed Credit:
The appellant continued to avail and utilize deemed credit for duty payment during the periods of forfeiture, contravening the rules. Show cause notices were issued demanding duty repayment and penalty imposition.

4. Show Cause Notices and Penalties:
Two show cause notices were issued demanding duty repayment and penalty imposition for contravention of rules. The adjudicating authority disallowed deemed credit and imposed penalties on the appellant.

5. Appeals and Tribunal Decision:
The appellant appealed the orders before the Commissioner (Appeals) and later to the Customs, Excise and Service Appellate Tribunal. The Tribunal allowed the appeal, considering defaults in duty payment and credit utilization but imposed penalties and directed interest payment.

6. Rectification Application:
The appellant filed a rectification application, alleging errors in the Tribunal's order. The Tribunal dismissed the application in 2013.

7. Consideration of Legal Pleas:
The appellant argued that the Tribunal's order did not consider their submissions or legal pleas. The appellant emphasized the intricacies of deemed credit and duty payment processes.

8. Dispute over Defaults and Credit Utilization:
The Tribunal noted defaults in duty payment and credit utilization by the appellant, leading to the issuance of debarment orders. The Tribunal allowed credit adjustment towards duty at clearance to avoid double payment.

9. Adjustment of Credit and Penalty Imposition:
The Tribunal allowed credit adjustment at the time of product clearance but imposed penalties for violating debarment orders. The penalty was reduced to Rs. 1 lac.

10. Penalty Imposition and Final Decision:
Despite the admitted defaults by the appellant, the Tribunal allowed credit adjustments and reduced the penalty. The Tribunal's decision was upheld due to the appellant's admission of defaults and violations.

This detailed analysis covers the issues raised in the legal judgment, including challenges to orders, forfeiture of deferred payment, deemed credit utilization, show cause notices, appeals, rectification application, Tribunal decisions, legal considerations, defaults in duty payment, credit adjustment, and penalty imposition.

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