2008 (3) TMI 150 - AT - Central Excise

Delay in the payment of duty - Taking into account the fact that the factory was closed and there was some financial difficulty and also the fact that the entire duty had been paid, we find that in this case, the penalties imposed are not justified - appellants are liable to pay interest for the delayed payment

Summary

Issues:
Default in duty payment, Penalty imposition, Payment modes, Applicability of penalties, Adjustment of duty payment.

Default in Duty Payment:
The case involved manufacturers of excisable goods who defaulted in duty payment, leading to a Show Cause Notice and subsequent penalties. The appellants failed to pay duty on time as per the specified fortnightly schedules, resulting in a delayed payment scenario. The Deputy Commissioner initially ordered the forfeiture of the facility to pay duty in installments, but this order was not fully implemented, prompting further actions against the appellants.

Penalty Imposition:
In the impugned Order-in-Original, penalties were imposed on the company and the Managing Director for the delayed duty payment. The Commissioner (Appeals) acknowledged the defaults but deemed the penalties excessive, reducing them from the original amounts. The appellants contested the penalties, arguing that they had paid the entire duty demanded in the Show Cause Notice, providing detailed information on the invoice numbers, amounts, and payment modes.

Payment Modes:
The appellants demonstrated that they made payments through different modes, such as PLA and Cenvat Account, for various invoice periods. They contended that the Department's allegation of thrice defaulting in payment was inaccurate, claiming only two instances of default. They argued that the payment through Cenvat Account should be considered equivalent to payment through PLA Account, emphasizing that they had already settled the entire duty amount demanded.

Applicability of Penalties:
Upon thorough consideration, the Tribunal found that while there were instances of payment default, the penalties imposed were unwarranted given the circumstances. Noting the factory closure, financial difficulties, and the complete duty payment, the Tribunal set aside the penalties. However, the appellants were directed to pay interest for the delayed payment, with the Original Authority tasked to calculate the correct interest amount within a specified timeframe.

Adjustment of Duty Payment:
The Tribunal clarified that even if duty payments were made through the Cenvat Account, they should be considered valid, as Cenvat payments are recognized as fulfilling duty obligations. Consequently, the Tribunal allowed the appeal by remanding the matter to ensure the correct calculation and recovery of interest, while emphasizing the adjustment of duty payments made through the Cenvat Account.