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2016 (8) TMI 238 - AT - Central ExciseImposition of penalty under rule 25 payment of duty during the default period under Rule 8(3A) - Held that - Utilization of cenvat credit for payment of duty during default period permissible. Gujarat High Court judgment in case of Indsur Global Ltd (2014 (12) TMI 585 - GUJARAT HIGH COURT) apply. As per the interpretation drawn by the Hon ble High court in the above judgment regarding the imposition of penalty under Rule 25, in the present case also it is not the case of non levy/ short levy, non payment/short payment of duty by suppression or willful mis-statement, fraud and collusion or contravention of any provision of this act or rule made with intent to evade payment of duty, therefore applying the ratio of this judgment appellant is not liable for penalty under Rule 25. - penalty set aside decided in favor of appellant.
Issues:
1. Imposition of penalty under Rule 25 for delayed excise duty payment. 2. Utilization of Cenvat credit during default period. 3. Applicability of penalty under Rule 25 based on legal precedents. Issue 1: Imposition of penalty under Rule 25 for delayed excise duty payment The case involved the appellant defaulting on excise duty payments for certain months, leading to the imposition of a penalty under Rule 25. The penalty amount was equivalent to the duty amount for the default period. The appellant argued that the duty was paid from the Cenvat credit account, citing a judgment by the Hon'ble Gujarat High Court that permitted such utilization. The Adjudicating authority imposed the penalty under Rule 25(1) (a) of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. However, the tribunal noted that the duty for the default period had been paid along with interest, and the utilization of Cenvat credit during the default period was deemed legal based on the Gujarat High Court judgment. Issue 2: Utilization of Cenvat credit during default period The appellant contended that the utilization of Cenvat credit for duty payment during the default period was lawful, referencing the Gujarat High Court judgment. The tribunal agreed with this argument, stating that the appellant had paid the duty and interest for the default period, thereby fulfilling their obligation. The judgment clarified that the utilization of Cenvat credit during the default period did not constitute illegality, as long as the duty was eventually paid, as was the case here. Issue 3: Applicability of penalty under Rule 25 based on legal precedents The appellant relied on legal precedents to argue against the imposition of penalty under Rule 25. Specifically, they cited a judgment involving Saurashtra Cement Ltd, where the Hon'ble Gujarat High Court emphasized that penalty under Rule 25 could only be imposed in cases involving fraud, collusion, willful misstatement, or suppression of facts. The tribunal concurred with this interpretation, noting that the present case did not involve such elements. Additionally, the tribunal distinguished another case cited by the Revenue, emphasizing that the facts differed significantly from the current case. Consequently, the tribunal set aside the penalty under Rule 25, following the legal principles established in the cited judgments. In conclusion, the tribunal ruled in favor of the appellant, setting aside the penalty imposed under Rule 25 for delayed excise duty payment. The judgment emphasized the legality of utilizing Cenvat credit during the default period and highlighted the importance of legal precedents in determining the applicability of penalties in excise duty cases.
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