2014 (10) TMI 303 - AT - Central Excise

Tribunal Upholds Duty Payment Default, Reduces Penalty

APS STEELS LTD. Versus COMMR. OF C. EX. & SERVICE TAX, TIRUPATHI

The Tribunal upheld the appellant's default in paying Central Excise duty beyond the allowed period, requiring duty payment without utilizing Cenvat ... CENVAT Credit - Appellant has utilized Cenvat credit which should have been paid in cash - Held that:- Appellant could not deposit the amount in cash. According to learned counsel, this happened because the customers did not pay the dues for goods received by them. I find that this Tribunal in the case of Meenakshi Associates v. Commissioner of C.E., Noida [2012 (6) TMI 275 - CESTAT, NEW DELHI], has taken a view that instead of depositing entire amount of Cenvat credit utilized in cash, if the assessee deposited the interest, that can be taken as compliance of requirement of Rule 8(3A) of Central Excise Rules and it can be accepted since the amount is paid in cash and immediately the same can be taken as Cenvat credit and therefore, the exercise is revenue neutral. In this case, since the interest has been deposited, the obligation as decided by this Tribunal in the case of Meenakshi Associates (supra) has been fulfilled and therefore, question to be decided is only relating to penalty. As far as the penalty is concerned, the appellant has already deposited an amount of ₹ 1,00,000/-. In my opinion, having regard to the quantum of default and assessee’s conduct, the penalty already paid is sufficient to meet ends of justice - Decided partly in favour of assessee. Issues:1. Default in payment of Central Excise duty beyond allowed period.2. Utilization of Cenvat credit instead of cash payment.3. Payment of interest and penalty for default.Analysis:1. The appellant defaulted in paying Central Excise duty for August 2011 & November 2011 beyond the allowed 30 days. As a result, duty had to be paid on each consignment without utilizing Cenvat credit during the default period. The appellant later paid the interest on the defaulted amount and a penalty.2. The Tribunal considered the appellant's inability to deposit the amount in cash due to customers not paying dues. Referring to a previous case, it was noted that depositing interest could be considered compliance with the requirement of Rule 8(3A) of Central Excise Rules. Since interest was paid, fulfilling the obligation, the focus shifted to the penalty. The appellant had already paid a penalty of &8377; 1,00,000. Considering the default amount and the appellant's conduct, the Tribunal deemed the penalty sufficient for justice.3. The Tribunal decided to reduce the penalty to the already paid &8377; 1,00,000, as it was deemed adequate in light of the circumstances. The stay application and appeal were both decided based on the above terms, ensuring compliance with the Central Excise Rules and considering the appellant's actions and payments made towards interest and penalty.