2014 (9) TMI 108 - AT - Central Excise

Denial of CENVAT Credit - Failure to adhere to the procedure prescribed under Rule 8 (3A) of the Cenvat Excise Rules, 2002 - discharge duty consignment wise through PLA - Held that - On perusal of impugned Commissioner (Appeals) order, it is noted that Lower Authority has upheld the demand and recoverable through account cenvat/cash along with interest and also held that they are eligible to take re-credit of cenvat. To avoid such revenue-neutral exercise, he directed the appellant to pay the interest above at the rates prescribed on amount payable in account cenvat consignment wise, but not so paid during impugned period for the period for the delay i.e. till the default amount is paid. Therefore, Ld. Advocate s plea that the Lower Authority having accepted payment of duty through cenvat credit, demand of interest not applicable is not correct. The appellant prima facie has not put forth any valid grounds for waiver of interest and penalty. Accordingly, the appellant is directed to deposit 10% of the penalty - Partial stay granted.

Summary

Issues: Default payment of excise duty, adherence to Rule 8(3A) of Cenvat Excise Rules, 2002, demand of interest and penalty under Rule 25 of Central Excise Rules, 2002.

Analysis:

1. The issue in this case pertains to the default payment of excise duty and non-compliance with Rule 8(3A) of the Cenvat Excise Rules, 2002, which requires duty to be discharged consignment-wise through PLA if the default exceeds 30 days. The Commissioner (Appeals) upheld the demand for duty payment along with interest, allowing re-credit of erroneously utilized Cenvat credit. However, the penalty under Section 11AC was set aside, while the penalty under Rule 25 was upheld. The appellant contested the demand of interest and penalty under Rule 25.

2. The appellant argued that since the duty was allowed to be paid through the Cenvat credit account instead of PLA in cash, there was no delay warranting interest payment. Additionally, they disputed the imposition of a 100% penalty under Rule 25, citing it as unduly harsh compared to the initial penalty of 10% imposed by the adjudicating authority. The appellant relied on case laws to support their contentions.

3. The respondent contended that Rule 8(3A) mandates duty payment through PLA/cash along with interest, emphasizing that a similar issue from an earlier period is pending before the Tribunal. The respondent also cited relevant case laws to support their argument for the payment of duty with interest.

4. After hearing both sides, the Tribunal noted that the demand for duty along with interest was correctly upheld by the Lower Authority. Despite the appellant's argument that interest should not apply due to the payment through Cenvat credit, the Tribunal found no valid grounds for waiving interest and penalty. Consequently, the appellant was directed to deposit 10% of the penalty amount within a specified timeline, with the predeposit of the balance duty, interest, and penalty being waived and their recovery stayed pending the appeal's outcome. Compliance was required to be reported by a specific date.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision regarding the default payment of excise duty, adherence to relevant rules, and the imposition of interest and penalties in the case.