2004 (10) TMI 167 - AT - Central Excise

Summary

Issues:
Challenge to demand and penalty confirmation for excise duty overdrawal from CENVAT account.

Analysis:
The case involved a challenge by M/s. Ghaziabad Organics Ltd. against the confirmation of demand and penalty for overdrawal of excise duty from their CENVAT account. The Appellants argued that they had wrongly paid the duty from the CENVAT account due to misinterpretation of Central Excise Rules. They contended that the duty for the first fortnight of the month was payable by the 20th and for the second fortnight by the 5th of the following month, but the CENVAT credit could only be utilized from the balance existing on the 15th day of the month. The Appellants had overdrawn the duty in subsequent fortnights after paying from the CENVAT account in the first fortnight of January 2001. They claimed that the amount overdrawn in subsequent fortnights should be adjusted against the credit available after the first overdrawal, reducing their liability to Rs. 3,34,840 instead of the entire confirmed amount.

The Appellants further argued that the overdrawal was not intentional but due to a lack of awareness of the law. They highlighted an amendment in Rule 57AB of the Central Excise Rules in August 2000, restricting the use of CENVAT credit, which they believed both the Department and themselves were unaware of. The Appellants emphasized that the overdrawal occurred from January to March 2001 and requested no penalty imposition due to the absence of mala fide intent.

The Departmental Representative countered by asserting that the duty paid from the CENVAT account was impermissible, thus requiring the Appellants to discharge the duty in cash. The Tribunal upheld the demand of duty, noting that the Appellants had removed excisable goods by wrongly debiting the duty from the CENVAT account, leading to removal without the appropriate Central Excise duty payment. While acknowledging the amendment in August 2000, the Tribunal deemed the overdrawal period as not transitional, warranting penalty imposition. However, considering the circumstances, the Tribunal reduced the penalty from the equivalent amount to Rs. One lakh, finding it more just and appropriate. The Appeal was disposed of with the reduced penalty imposed on the Appellants.