2005 (2) TMI 413 - AT - Central Excise

Summary

Issues:
Imposition of penalty under Rule 173Q for payment of duty from Cenvat credit instead of Personal Ledger Account (PLA).

Analysis:
The appellant appealed against the penalty imposed under Rule 173Q for paying duty from Cenvat credit instead of PLA. The appellant had the facility to pay Central Excise duty on a fortnightly basis under Rule 173G, but this facility was withdrawn for two months by the Dy. Commissioner. The appellant then paid duty on a consignment basis, but from the Cenvat credit account, not PLA. The Dy. Commissioner imposed a penalty of over Rs. 15 lakhs, equal to the duty paid from Cenvat credit. The Commissioner (Appeals) upheld the order but reduced the penalty to Rs. 50,000. The appellant's contention was that there should be no distinction between payment from PLA and Cenvat credit, citing a High Court order. The SDR argued that Rule 173G(e) requires payment "by debit to the account current" only, not from Cenvat credit, and referenced Tribunal decisions supporting this view.

The Tribunal analyzed Rule 173G(e) and found that the requirement is to pay excise duty for each consignment by debiting the account current, which includes utilizing Cenvat credit. The provision states that the manufacturer shall maintain an account current and discharge duty liability by debiting such account current or by utilizing Cenvat credit. The Tribunal's interpretation was supported by a High Court judgment stating that utilizing Cenvat credit is considered as good as making payment by debiting the account current. Therefore, the payment of duty from Cenvat credit by the appellant satisfied the rule's requirement, as per the High Court judgment. Consequently, the penalty was not justified, and the appeal was allowed, setting aside the impugned order. The appellant was entitled to any consequential relief.

In conclusion, the Tribunal's detailed analysis of Rule 173G(e) and the supporting High Court judgment clarified that utilizing Cenvat credit for duty payment was in compliance with the rule, nullifying the penalty imposed under Rule 173Q.