2016 (11) TMI 404 - AT - Central Excise

Demand of duty with interest - imposition of penalty - manufacture of Rubber tyres of motor vehicles classifiable under chapter 40112090 of the Scheduled to Central Excise Tariff Act 1985 - payment of duty at the time of removal of consignment - Rule 8(3A) of the Central Excise Rules, 2002 - Held that - It is an admitted fact that the appellant had defaulted in making payment of Central Excise duty within the stipulated time frame prescribed under Rule 8 of the Central Excise Rules, 2002. It is also an admitted fact that the entire duty liability confirmed in the impugned order was paid by the appellant, partly from its cenvat account and partly from the personal ledger account. So far as payment from the cenvat account is concerned, the Hon ble Gujarat High Court in the case of Indsur Global Ltd. (2014 (12) TMI 585 - GUJARAT HIGH COURT) have held that payment from the cenvat account during the defaulted period is to be considered as a valid payment. Therefore, we are of the view that the payment made by the appellant is to be construed as payment of duty in terms of Rule 8 of the Central Excise Rules, 2002. With regard to payment of interest on delayed payment of duty, we are of the view that no such specific provisions exist in the Central Excise Rules, providing for relaxation from payment of interest in any circumstances. Therefore, in absence of any specific provisions, we are of the considered opinion that the appellant is liable to pay interest for delayed payment of Central Excise duty. Thus, the interest liability is confirmed. Considering the overall facts and circumstances of the case, we are of the view that the penalty of ₹ 25,00,000/- imposed in the adjudication order is in the higher side and in the interest of justice, we reduce the penalty to ₹ 1,00,000/- - appeal disposed off - decided partly in favor of assessee.

Summary

Issues:
Non-payment of Central Excise duty within stipulated time frame, validity of payment from cenvat account, liability for interest on delayed payment, imposition of penalty.

Analysis:

1. Non-payment of Central Excise Duty:
The appellant failed to pay Central Excise duty within the prescribed time frame, leading to a demand of &8377; 1,77,46,237/- along with interest and a penalty of &8377; 25,00,000. The appellant argued that the delay was due to documents being seized by DGCEI Officers, and payment was made once the documents were returned. The Tribunal acknowledged the default but considered the duty payment made by the appellant as valid under Rule 8 of the Central Excise Rules, 2002, citing a judgment by the Hon'ble Gujarat High Court.

2. Validity of Payment from Cenvat Account:
The Tribunal referred to the judgment of the Hon'ble Gujarat High Court in a similar case to establish that payment from the cenvat account during the default period is considered valid. As the appellant had partially paid the duty from the cenvat account, it was deemed as payment in accordance with Rule 8 of the Central Excise Rules, 2002.

3. Liability for Interest on Delayed Payment:
The Tribunal noted that there were no specific provisions in the Central Excise Rules exempting payment of interest in any circumstances. Therefore, the appellant was held liable to pay interest for the delayed payment of Central Excise duty. The interest liability was confirmed by the Tribunal based on the absence of any provisions providing for relaxation from payment of interest.

4. Imposition of Penalty:
The Tribunal considered the penalty of &8377; 25,00,000 imposed in the adjudication order as excessive and reduced it to &8377; 1,00,000 in the interest of justice. After evaluating the overall facts and circumstances of the case, the Tribunal found the reduced penalty amount to be more appropriate. The appeal was disposed of with the revised penalty amount.

In conclusion, the Tribunal upheld the interest liability for delayed payment of Central Excise duty, validated the payment made from the cenvat account, and reduced the penalty amount imposed on the appellant. The judgment provided a detailed analysis of each issue raised by the parties and applied relevant legal precedents to reach a fair decision.