2012 (2) TMI 420

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....cleared the goods and filed ER-1 returns for the month of November 2007 to September, 2008 showing excise duty payable through PLA and excise duty payable through Cenvat credit account but did not remit the excise duty payable through PLA. Thus there was default in payment of excise duty as per details shown below : S. No. Month Central Excise duty debited In Cenvat credit account though the assessee was not entitled to do so Central Excise duty payable but not paid in cash on consignment basis as per Rule 8(3A) ibid Total duty payable in the month Date of deposit of amount towards part payment of duty and part payment of interest 1. November 07 86528 245000 331528 26-12-2007 2. December 07....

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....l Excise Rules, 2002. On appeal filed with the Commissioner (Appeals), the appellants did not get any relief. On adjudication, a demand of Rs. 30,90,255/- was confirmed and the amount deposited through Cenvat credit amounting to Rs. 9,84,355/- and through PLA to the extent of Rs. 21,05,900/- were appropriated towards the said demand. Further interest under Section 11AB was also demanded. Further a penalty of Rs. 20,000/- was imposed on the appellant under Rule 25 of Central Excise Rules, 2002. Aggrieved by the order, Revenue filed appeal with the Commissioner (Appeals) on the ground that payment of duty through Cenvat credit is not a due discharge of excise duty when the assessee was in default and therefore, the order of the adjudicating a....

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.... 6. We have considered the arguments of both sides. We are prima facie of the view that Rule 8(3) or Rule 8(3A) of Central Excise Rules, 2002 do not have the effect of denying the eligibility for Cenvat credit because Rule 8(3A) prescribes that if there is a default, the consequence under the Central Excise Rules will follow and there is nothing mentioned about denying the benefit governed through Cenvat Credit Rules, 2004. In the normal circumstances, payment made through Cenvat credit account is a good discharge of duty liability. The exception carved out in Rule 8(3A) is that payment through Cenvat credit is not a good payment when assessee is a defaulter. This exception will last only till the default lasts. Once default is made g....