2015 (10) TMI 1186 - AT - Central Excise

Denial of CENVAT Credit - duty paid during the defaulted period from their CENVAT account instead of paying in cash under PLA - contravention of Rule 8(3A) of Central Excise Rules, 2002 - Held that - Authorised Representative for the Revenue submits that they have contravened the Rule and therefore, penalty should be imposed. It is further contended that they have not discharged the duty consignment-wise and therefore, they are liable to pay interest. - Gujarat High Court in the case of Indsur Global Ltd (2014 (12) TMI 585 - GUJARAT HIGH COURT) the demand of duty by cash is not sustainable. As the Hon ble Gujarat High Court declared the law invalid and therefore, the imposition of penalty is not warranted. However, Revenue is at liberty to raise the demand of interest, if there is a delay in payment of duty consignment-wise. - impugned orders are set aside. - Decided in favour of assessee.

Summary

Issues involved: Duty liability payment under Rule 8 of Central Excise Rules, 2002; Utilization of CENVAT credit for duty payment; Imposition of penalty and interest.

Analysis:
1. Duty Liability Payment under Rule 8: The Appellants, engaged in manufacturing M.S. Ingots, failed to discharge duty liability within the stipulated period and paid duty from their CENVAT account instead of cash under PLA, contravening Rule 8(3A) of Central Excise Rules, 2002. The Hon'ble Gujarat High Court in the case of Indsur Global Ltd held that the portion "without utilizing the CENVAT Credit" of sub-rule (3A) of Rule 8 shall be invalid. The Tribunal, following this decision, held that the demand of duty by cash is not sustainable due to the court's declaration, thus setting aside the imposition of penalty.

2. Utilization of CENVAT Credit for Duty Payment: The Tribunal's decision was based on the ruling of the Hon'ble Gujarat High Court, which rendered the portion of Rule 8(3A) invalid, thereby allowing duty payment from the CENVAT account. Consequently, the Tribunal held that penalty imposition was unwarranted in this case, as the Appellants' method of duty payment was in accordance with the court's decision.

3. Imposition of Penalty and Interest: The Revenue contended that penalty should be imposed for contravening the Rule and that interest should be paid due to the failure to discharge duty consignment-wise. However, the Tribunal, following the Gujarat High Court's decision, set aside the impugned orders, allowing the appeals filed by the Appellants. The Tribunal clarified that while penalty imposition was not warranted, the Revenue could raise a demand for interest in case of delays in duty payment consignment-wise.

In conclusion, the Tribunal's judgment in these appeals centered on the interpretation of Rule 8 of the Central Excise Rules, 2002 in light of the Gujarat High Court's ruling, ultimately leading to the setting aside of the penalty imposition and allowing the appeals filed by the Appellants.