2015 (11) TMI 559 - AT - Central Excise

Excess utilization of cenvat credit - Penalty imposed on the main appellant under Rule 13 and Rule 26 of the Cenvat Credit Rules - Held that - Issue has arisen during the period 2002 when the scheme of fortnightly payment was introduced. Further, we find that the present case is only a case of excess withdrawal for few days. The appellant has been paying regularly the duty even in the subsequent fortnight. Even if they would have paid duty in a particular fortnight by PLA, i.e. without excess withdrawal, the so called as withdrawal would be available to them for payment in the next fortnight. - this is a fit case for waiver of penalty - Decided in favour of assessee.

Summary

Issues:
- Excess utilization of cenvat credit under Rule 8 of the Central Excise Rules
- Penalty imposed under Rule 13 of the Cenvat Credit Rules, 2002 and Rule 26 of the Central Excise Rules

Analysis:
The case involved the appellants, engaged in the manufacture of copper products, who were paying excise duty on a fortnightly basis using credit of duty paid on inputs as per Rule 8 of the Central Excise Rules. The issue arose when it was found that they were utilizing the credit in contravention of the rule by using it during different periods than allowed. A demand notice was issued for the excess amount utilized, leading to the confirmation of the demand and imposition of penalties by the Commissioner. The appellants challenged this order.

During the hearing, the appellants had already deposited the amount at the stay stage and were allowed to avail cenvat credit of the equal amount. They argued that the appeal now only related to the penalties imposed on them, highlighting that in a previous case, the Tribunal had set aside a penalty for a similar issue. They emphasized that there was no intention to defraud the government and the excess credit utilization was for a few days only.

After considering the submissions and reviewing the records, the Tribunal focused on the penalty imposed on the main appellant under Rule 13 of the Cenvat Credit Rules and on the second appellant under Rule 26 of the Central Excise Rules. The Tribunal noted that the issue arose during the introduction of the fortnightly payment scheme in 2002 and that the excess withdrawal was for a few days only. It was observed that the appellants had been regular in paying duty even in subsequent fortnights, and any excess withdrawal could have been adjusted in the following fortnights.

Ultimately, without delving into the legality of the issue, the Tribunal deemed it a fit case for waiver of the penalty. Consequently, the appeals were allowed, and the penalties were set aside. This decision was made considering the facts and circumstances of the case, leading to the final pronouncement in court.