Cenvat debit regularisation and reduced penalty for removal of excisable goods without payment from the prescribed account

Duty paid by debit in the Cenvat credit account instead of the account current was treated as regularised when the amount was subsequently paid through PLA, and the earlier Cenvat debit was allowed to remain available for utilisation. Removal of excisable goods without payment from the prescribed account was treated as a contravention attracting penalty under Rule 25(a) of the Central Excise Rules, 2001, although the surrounding facts justified moderation of the penalty. The penalty was therefore reduced to Rs. 25,000 while the duty payment position was upheld as regularised.

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Issues: Whether duty paid by debit in Cenvat credit account instead of account current could be regularised on subsequent payment through PLA, and whether penalty under Rule 25(a) of the Central Excise Rules, 2001 was warranted.

Analysis: The duty amount was subsequently paid from account current, and the earlier debit from the Cenvat account was directed to be treated as available for utilisation. On the penalty aspect, removal of excisable goods without payment from account current was treated as a contravention attracting Rule 25(a) of the Central Excise Rules, 2001. The earlier debarment from fortnightly payment facility did not by itself eliminate penalty liability, though the surrounding facts justified moderation of the penalty.

Conclusion: The duty payment was treated as made through PLA, the Cenvat debit was allowed to remain available for utilisation, and the penalty was reduced to Rs. 25,000/-, in favour of the assessee to that extent.

Final Conclusion: The appeal succeeded only in part, with the monetary penalty substantially reduced while the duty payment position was upheld as regularised.

Ratio Decidendi: Removal of excisable goods in breach of the prescribed mode of duty payment attracts penalty, but the quantum may be reduced on the facts where the duty is subsequently paid through the proper account.

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