Appellant ordered to deposit Rs. 6,00,000 within 8 weeks for duty default, penalty imposed.

The Tribunal ruled that the appellant must deposit Rs. 6,00,000 through PLA within eight weeks for defaulted duty payment, allowing recredit to the Cenvat account. It emphasized Rule 8(3A) compliance, requiring PLA payment during default and imposed a penalty of Rs. 5,000 under Rule 27. The decision aligned with legal provisions and higher court interpretations, limiting the penalty and emphasizing duty payment through PLA during default.

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Issues Involved:
1. Whether the defaulted amount is to be paid through PLA or can be adjusted against Cenvat credit.
2. Imposition of penalty under Rule 25 read with Section 11AC or Rule 27 of Cenvat Credit Rules.

Issue-wise Detailed Analysis:

1. Payment of Defaulted Amount:
The appellant defaulted in payment of duty during October 2010 to November 2010. The short payment was later made through PLA. However, for subsequent periods, the appellant continued to clear goods by debiting duty from the Cenvat credit account. The Revenue contended that under Rule 8, the appellant should have paid duty from PLA instead of utilizing the Cenvat credit account, leading to a demand of Rs. 13,39,225/- along with interest and a penalty of Rs. 2,25,000/-.

The Tribunal referenced several decisions, including *Solar Chemferts Pvt. Ltd. v. Commissioner* and *F.S. Engineers v. CCE, Ahmedabad*, which held that utilizing Cenvat credit during default results in revenue loss only to the extent of interest. The Tribunal found that the utilization of Cenvat credit during the default period results only in interest loss to the Revenue.

However, a separate order by one member emphasized the legal provisions under Rule 8(3A) of the Central Excise Rules, 2002, which mandates that if the default in payment continues beyond thirty days, the duty must be paid consignment-wise through PLA without utilizing Cenvat credit. This interpretation was supported by the Gujarat High Court in *Commissioner of Central Excise v. Harish Silk Industries*, which clarified that during the forfeiture period, duty must be paid through PLA.

2. Imposition of Penalty:
Regarding the penalty, the Tribunal noted that the issue had been settled by the Gujarat High Court in *CCE v. Saurashtra Cement Ltd.*, which dismissed the Revenue's appeal against the Tribunal's order. The Tribunal decided that only a penalty under Rule 27, which prescribes a maximum penalty of Rs. 5,000/-, was applicable. The Tribunal granted a waiver of the deposit of duty already paid through Cenvat credit and directed the appellant to deposit Rs. 5,000/- towards the penalty.

Majority Decision:
The majority decision required the appellant to deposit Rs. 6,00,000/- through PLA within eight weeks for compliance with Section 35F, after which they would be entitled to recredit the equivalent amount in their Cenvat credit account. This decision was based on the interpretation that during the default period, duty must be paid through PLA, not Cenvat credit.

Conclusion:
The Tribunal's judgment addressed two primary issues: the method of payment for defaulted duty and the imposition of penalties. The decision emphasized compliance with Rule 8(3A) of the Central Excise Rules, requiring payment through PLA during the default period and limited the penalty to Rs. 5,000/- under Rule 27. The majority decision mandated a deposit of Rs. 6,00,000/- through PLA, aligning with the legal provisions and higher court interpretations.

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