2014 (1) TMI 263 - AT - Central Excise

Amount paid for BCD and Education cess through Cenvat credit debit Recoverability of amount as per Rule 8(3A) of the Central Excise Rules 2002 - Payment of amount equal to cenvat credit utilized for payment - Penalty under Rule 27 of Central Excise Rules 2002 - Held that - Following Solar Chemferts Pvt. Ltd. vs. Commissioner of Central Excise, Thane-I 2011 (6) TMI 640 - CESTAT, MUMBAI - The entire amount of duty for the period of default was apparently paid in full from PLA and, for the month of April 2007, the duty was paid within the prescribed time and hence there was no default Following Commissioner of Central Excise and Customs vs. Saurashtra Cements Ltd. 2010 (9) TMI 422 - GUJARAT HIGH COURT thus, the assessee is liable to pay Rupees five thousands as penalty Decided partly in favour of Assessee.

Summary

Issues:
1. Discharge of duty liability by the assessee.
2. Default in duty payment for specific months.
3. Irregularity in the mode of payment of duty for a particular month.
4. Demand of duty, interest, and penalty by the department.
5. Adjudication of the dispute by the original authority.
6. Appeal against the Order-In-Original.
7. Main issue of recoverability of a specific amount from the assessee.
8. Appeal against penalty and demand of duty by both parties.
9. Interpretation of Rule 8(3A) of the Central Excise Rules, 2002.
10. Comparison of relevant legal precedents.
11. Decision on the penalty imposed on the assessee.

Analysis:
The judgment by P.G. Chacko of the Appellate Tribunal CESTAT Bangalore involved a case where M/s Bactolac Formulations Pvt. Ltd. failed to pay duty on time for certain months, leading to a dispute with the department. The department issued a show cause notice demanding a specific amount under Section 11A(1) of the Central Excise Act for irregularity in duty payment for April 2007. The original authority confirmed the demand and imposed a penalty equal to the duty amount. However, the Commissioner (Appeals) set aside the duty demand but reduced the penalty to Rs.50,000. The assessee appealed against the penalty, while the department appealed against setting aside the duty demand and sought an increase in the penalty.

The main issue revolved around the recoverability of Rs.75,726 paid through debits in the CENVAT credit account for April 2007, in line with Rule 8(3A) of the Central Excise Rules, 2002. The Tribunal compared legal precedents, particularly Solar Chemferts case, where it was established that if duty was paid through CENVAT credit and not refunded, demanding the same amount again would result in double payment. The Tribunal dismissed the department's appeal as the facts aligned with Solar Chemferts, concluding that the department's stance was not valid. The penalty was reduced to Rs.5,000 under Rule 27, following the decision in Solar Chemferts and a ruling by the Hon'ble Gujarat High Court.

In summary, the judgment clarified the recoverability of duty paid through CENVAT credit, emphasizing the prohibition on double payment. It highlighted the importance of following legal precedents and specific rules in determining penalties, ultimately reducing the penalty imposed on the assessee.