2009 (7) TMI 959 - AT - Central Excise

Summary

Issues involved: Failure to discharge duty liability on time, utilization of Cenvat credit for duty payment, financial difficulties of the appellants.

Summary:

Issue 1: Failure to discharge duty liability on time
The appellants, engaged in manufacturing Petroleum/Diesel Dispensing pumps, failed to pay duty for October 2007 on time. They paid the outstanding amount of Rs. 66,60,000 with interest on 26-12-2007. The Central Excise Rules required duty payment by the 5th of the following month, and failure to pay within 30 days results in duty payment at the time of removal without utilizing Cenvat credit. The appellants did not pay duty consignment-wise as required, leading to penalties and demands for payment.

Issue 2: Utilization of Cenvat credit for duty payment
The appellants debited Rs. 38,56,697 from their Cenvat Credit account to pay the duty, instead of paying consignment-wise. The Tribunal noted that once duty and interest are not paid within a month from the default date, the consequences follow automatically. The law requires payment consignment-wise without utilizing Cenvat credit, placing the burden on the assessee. The appellants' failure to pay duty from PLA led to penalties and consequences for clearances made without duty payment.

Issue 3: Financial difficulties of the appellants
The appellants claimed financial difficulties as the reason for the delayed payment, citing a loss incurred in the previous year. However, the Tribunal found evidence of substantial profits, investments, fixed deposits, and funds available with the appellants. Considering the financial stability of the appellants, the Tribunal denied an unconditional stay and directed them to deposit the full duty amount and penalty within eight weeks. Compliance was to be reported by a specified date, with waivers subject to pre-deposit requirements.

This judgment highlights the importance of timely duty payment, proper utilization of Cenvat credit, and the assessment of financial conditions in determining penalties and stay orders in excise duty cases.