2017 (3) TMI 167 - AT - Central Excise

Imposition of penalty u/r 25(1)(a) of CER, 2002 - rule 8(3A) ibid - Held that - Appellant has admitted to utilisation of CENVAT credit for discharge of duty liability during the period of withdrawal of privilege. As the debit was effected only on the normal date of payment that is an entitlement restricted to the withdrawn privilege, the appellant has cleared the goods without payment of duty which is an offence under CEA, 1944 warranting recovery of duty and imposition of penalty - appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against reduction of penalty under rule 25(1)(a) of Central Excise Rules, 2002.

Detailed Analysis:
1. Duty Liability and Compliance: The appellant, a registered assessee engaged in manufacturing motor vehicle parts, was under scrutiny for duty liability from February to April 2010. As per Central Excise Rules, assessees must discharge their duty liability monthly, failing which interest is charged. Non-compliance beyond thirty days results in denial of monthly payment and CENVAT facility until the outstanding amount is paid.

2. Payment Details: The appellant partially paid the February 2010 liability and fully paid the March 2010 liability after the due date. For April 2010, the appellant utilized CENVAT credit for most of the liability but delayed payment of the balance amount, resulting in non-privilege to defer payment for clearances from 1st to 7th May 2010.

3. Penalty Imposition: The appellant argued financial difficulty as the reason for non-compliance. However, the tribunal found the appellant liable for penalty under rule 27 of Central Excise Rules, 2002 for contravening rule 8(3A). The tribunal upheld the penalty, stating that the appellant failed to discharge duty liability as required and evaded payment for clearances in early May 2010, justifying the penalty amount.

4. Judgment: The tribunal dismissed the appeal, emphasizing that the appellant's utilization of CENVAT credit without timely payment constituted an offense under the Central Excise Act, warranting recovery of duty and imposition of penalty. The tribunal found no grounds to interfere with the lower authorities' decision, maintaining the penalty amount imposed.

In conclusion, the tribunal upheld the penalty imposed under rule 25(1)(a) of Central Excise Rules, 2002, emphasizing the appellant's failure to comply with duty payment obligations and justifying the penalty amount based on the evaded duty.