2004 (4) TMI 137 - AT - Central Excise

Payment of duty - Interest and penalty - HELD THAT - We are of the firm opinion that duty was to be debited from PLA. However, it is the appellants case that duty was subsequently debited by them from their PLA and debit entry was reversed in their Cenvat credit account. The above contention of the appellant is countered by the Learned DR by submitting that there is nothing on record to support the above argument of the appellant and the fact that Commissioner has confirmed the demand shows that the same was not paid by them. However, this being a factual dispute can be resolved at the original level in the light of our finding that duty was required to be paid through PLA and on doing so, the duty already paid through Cenvat account would get credited in the said account. As regards interest and penalty, it has been argued before us that the provisions of Section 11AB and 11AC are applicable only in case of suppression, mis-statement etc. There being no such factors available in the instant case, inasmuch as duty payment from credit account having been reflected in the monthly return, the said sections cannot be invoked. It is seen that apart from invoking Section 11AC, penalty was also Imposed under Rule 173Q. Rule 173Q(1)(e) provides that in the event of failure to pay duty on consignment wise basis by debiting through account current, it will be deemed as if such goods have been cleared without payment of duty and consequences and penalties as provided in the Central Excise Rules shall follow. As such, though the duty was paid by debiting through Cenvat account, a situation has been created in the said rule by deeming fiction of law as if the clearances have been effected without payment of duty. If that be so, interest and penalty has to be confirmed. We order accordingly. Thus, we reduce the penalty to Rs. 1 Lakh. But for the above modification in quantum of penalty, the appeal is otherwise rejected.

Summary

Issues involved:
The dispute revolves around whether an assessee, debarred from paying duty on a fortnightly basis and directed to pay duty on a consignment-wise basis, can discharge duty liability by debiting Cenvat credit account or must pay duty out of PLA, and the implications regarding interest and penalty in such a scenario.

Summary:
The appellant, while availing the facility to pay duty fortnightly, was directed to pay duty on a consignment-wise basis for defaulting in duty payment. The appellant paid duty by debiting Cenvat credit account during the two-month period of debarment. The Revenue contends that duty must be paid from the current account, i.e., PLA, as per Rule 173G(1)(e). The Tribunal analyzed the rule, noting it refers to two distinct modes of payment: debiting the current account or utilizing credit. The Tribunal concluded that only the current account must be used during the debarment period, withdrawing the facility to use credit. Previous decisions supported this interpretation, emphasizing duty payment through Cenvat credit during debarment contravenes the rule, attracting interest and penalties.

The Tribunal rejected the appellant's arguments that 'account current' includes Cenvat credit account, citing the distinct usage of terms in the rule and departmental instructions. The Tribunal highlighted that the rule's penal nature necessitates strict adherence to paying duty from the current account during debarment. The appellant's contention that the duty was later debited from PLA was disputed by the Revenue. While the appellant argued against invoking penalty provisions due to no suppression or misstatement, the Tribunal upheld the penalty under Rule 173Q(1)(e) for deeming the goods cleared without duty payment, ordering a reduced penalty of Rs. 1 Lakh due to specific circumstances.

In conclusion, the Tribunal upheld duty payment from PLA during the debarment period, confirmed interest and penalty for contravention, and reduced the penalty amount, ultimately rejecting the appeal except for the penalty modification.