2016 (12) TMI 721 - AT - Central Excise

Utilisation of CENVAT credit - Held that - I find that Central Excise duty liability attributable to the defaulted period was paid by the appellant alongwith interest, which has been appropriated in the adjudication order dated 28.02.2012. It is a fact on record that the appellant had paid the excise duty on the goods removed from the factory during the defaulted period by utilizing the cenvat credit. The issue regarding utilization of cenvat credit was the subject matter of dispute before the Hon ble Gujarat High Court in the case of Indsur Global Ltd. 2014 (12) TMI 585 - GUJARAT HIGH COURT , wherein the Hon ble Court have declared the phrase without utilizing the cenvat credit contained in Sub-Rule (3A) of Rule 8 of the Central Excise Rules, 2002, as invalid. The effect of said judgment is that during the defaulted period, the assessee can pay the excise duty either from the cenvat account or by making debit in its Personal Ledger Account (PLA). In the case in hand, since the appellant has paid the Central Excise duty on clearance of goods by debiting its cenvat account, the same is in conformity with the provisions of Central Excise Rules as per the law declared by the Hon ble High Court. Therefore, I do not find any merits in the impugned order - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Appeal against order passed by Commissioner (Appeals)
- Default in payment of Central Excise duty
- Confirmation of duty demand
- Utilization of cenvat credit
- Penalty imposition
- Applicability of judgment from Hon’ble Gujarat High Court

Analysis:
The case involves an appeal against the order dated 16.10.2012 passed by the Commissioner (Appeals), Central Excise and Customs, New Delhi. The appellant, engaged in the manufacture of Wiring harness, defaulted in paying Central Excise duty between April 2010 to November 2010. The Department initiated action under Rule 8 of the Central Excise Rules, 2002, leading to a show cause notice and an adjudication order dated 28.02.2012. In this order, a duty amount was paid by the appellant and cenvat credit utilization was questioned, resulting in a confirmed demand and imposition of a penalty of &8377; 2,25,000. The appellant appealed the decision before the Tribunal.

During the proceedings, the Director of the appellant company argued that the Central Excise duty for the defaulted period was paid along with interest, and the utilization of cenvat credit for duty payment was permissible based on a judgment from the Hon’ble Gujarat High Court. On the other hand, the ld. A.R. representing the respondent supported the findings of the impugned order.

After hearing both parties and reviewing the case records, the Tribunal found that the Central Excise duty liability for the defaulted period was indeed paid by the appellant along with interest. The appellant had utilized cenvat credit to pay the duty, which was the subject of dispute. The Tribunal referred to the judgment of the Hon’ble Gujarat High Court in the case of Indsur Global Ltd., which invalidated the requirement of not utilizing cenvat credit for duty payment. Based on this legal precedent, the Tribunal concluded that the appellant's payment method was in accordance with the law. Therefore, the Tribunal did not find merit in the impugned order and allowed the appeal filed by the appellant.

In summary, the Tribunal ruled in favor of the appellant, emphasizing the legality of utilizing cenvat credit for Central Excise duty payment during the defaulted period, as per the judgment of the Hon’ble Gujarat High Court.