Penalty for delayed debit of scrap capital goods credit not sustainable where payment was made before the due date and no evasion was shown.

Penalty under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Central Excise Act is not sustainable where the amount payable on clearance of scrapped capital goods under Rule 3(5A) is paid before the due date prescribed under Rule 8 of the Central Excise Rules. The amount was treated as duty for purposes of Rule 8 and became payable with the duty on finished goods by the 5th day of the next month. Since payment was made well before the due date, and non-debiting at the moment of clearance did not by itself show any intention to evade payment, penal consequences were held inapplicable.

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Issues: Whether penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944 was sustainable when the amount payable on clearance of scrapped capital goods under Rule 3(5A) of the Cenvat Credit Rules, 2004 was paid before the due date prescribed under Rule 8 of the Central Excise Rules.

Analysis: The amount payable on clearance of the scrapped capital goods was not payable immediately on removal but along with the duty on finished goods by the 5th day of the next month, because the Explanation to Rule 8 treated the amount payable under the Cenvat Credit Rules, 2004 as duty for that purpose. The payment was made much before the due date, and the mere fact that it was not debited immediately on clearance did not establish any intention to evade payment.

Conclusion: The penalty was not sustainable.

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