2018 (9) TMI 1123 - AT - Central Excise

Recovery of the duty paid from the CENVAT account with interest - Penalties - Held that - The period involved is prior to 31.3.2005 on which date the non-obstante clause was introduced in Rule 8, wherein there has been a restriction imposed for paying duty liability using the CENVAT account when there is a delay in payment of duty - appeal dismissed - decided against Revenue.

Summary

Issues:
Department's appeal against Commissioner (Appeals) order setting aside demand, interest, and penalties for duty paid from CENVAT account instead of current account/PLA.

Analysis:
The case involved the department appealing against the order of the Commissioner (Appeals) who had set aside the demand, interest, and penalties imposed on the respondents for clearing cotton yarn and polyester yarn to consignment agents and paying the duty differentials from their CENVAT account instead of the current account/PLA. The original authority had confirmed the duty demand, interest, and imposed a penalty under Rule 25 of the Central Excise Rules, 2002. However, the Commissioner (Appeals) overturned this decision, leading the department to approach the Tribunal.

The respondent's counsel argued that under Rule 8(4) of the Central Excise Rules, 2002, as it stood then, the assessee could pay the excise duty for each consignment by debiting the current account, allowing for the payment of differentials through the CENVAT account. The counsel cited precedents such as the case of Noble Drugs Ltd. Vs. Commissioner of Central Excise and Jayaswal Neco Ltd. Vs. Commissioner of Central Excise, Raipur, to support the contention that duty liability could be discharged using the CENVAT account during the relevant period.

Considering the arguments presented, the Tribunal noted that the issue pertained to a period before 31.3.2005, when a non-obstante clause was introduced in Rule 8, restricting the use of the CENVAT account for duty payment in case of payment delays. Relying on the decisions referred to by the respondent's counsel, including the judgment of the Larger Bench, the Tribunal found no grounds to interfere with the Commissioner (Appeals) order. Consequently, the Tribunal dismissed the appeal filed by the Revenue, deeming it devoid of merit.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing the applicability of the precedents cited by the respondent's counsel in allowing duty payment through the CENVAT account during the relevant period before the introduction of the non-obstante clause in Rule 8 of the Central Excise Rules, 2002.