Customs, Excise and Gold Tribunal - Delhi
H.P.L. Socomac Pvt. Ltd. vs Cce on 14 February, 2005
Equivalent citations: 2005(102)ECC342, 2005(192)ELT300(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. The appellant is filing this appeal being aggrieved with the imposition penalty on him under Rule 173Q.
2. Material facts leading to the imposition of penalty are like this. The appellant was availing of the facility to discharge Central Excise duty liability on a fortnightly basis under Rule 173G of Central Excise Rules. Under Order No. 13/2001-CE dated 16.4.2001, the jurisdictional Dy. Commissioner withdraw that facility for a period of two months and ordered that appellant shall pay duty for each consignment in debit to the account current. Pursuant to this order, the appellant paid duty on consignment basis at the time of clearance of the goods. However, such duty payment was made from the Cenvat credit account and not from the Personal Ledger Account (PLA). Such payment, from Cenvat credit was considered an offence under order dated 27.7.2001 of the Dy. Commissioner and he imposed a penalty of over Rs. 15 lakhs on the appellant. This penalty was equal to the duty paid by the appellant from Cenvat credit. When it filed appeal before the Commissioner (Appeals), that Commissioner upheld the order; but gave relief by reducing the amount of penalty to Rs. 50,000. The present appeal is directed against that order.
3. The contention of the learned Counsel for the appellant is that no distinction is to be made between payment made from PLA and Cenvat credit account and this legal position remains settled by the order of the Hon'ble High Court of Mumbai (Nagpur Bench) in Writ Petition No. 384/2001 filed on 5.2.2001 and in view of that legal position, penalty is required to be set aside.
4. As against the above, learned SDR contends that the Rule 173G(e) requires payment "by debit to the account current" only and not from Cenvat credit. He has also relied on two decisions of the Tribunal [Elson Packaging India Pvt. Ltd. v. CCE, Surat, 2001 (169) ELT 171, M/s Dhillon Kool Drinks and Beverages Ltd. v. CCE, Rohtak ] in support of the contention that payment in terms of Rule 173G(e)(i) takes in only debit from account current i.e. PLA and not Cenvat credit account.
5.I have perused the records and considered the submissions made by both sides. The relevant provision in Rule 173G(e) may be read:
"(e) If the manufacturer defaults on account of any of the following reasons, namely:
(i) full payment of any one installments is discharged beyond a period of thirty days from the date on which the installment was due in a financial year, or
(ii) the due date on which full payment of installments are to be made is violated for the third time in a financial year, whether in succession or otherwise, then the manufacturer shall forfeit the facility to pay the dues in installments under this sub-rule for a period of two months, starting from the date of communication of an order passed by the proper officer in this regard and during their period the manufacturer shall be required to pay excise duty for each consignment by debit to the account current referred to in Clause (b) and in the event of any such failure it will be deemed as if such goods have been cleared without payment of duty and the consequences and penalties as provided in the Central Excise Rules shall follow".
6. A perusal of the above provision makes it clear that the requirement is "to pay excise duty for each consignment by debit to the account current referred to in Clause (b). Clause (b) may, now, be read to understand the import of the rule.
"(b) The manufacturer shall maintain an account current with the Commissioner and shall discharge his duty liability by debiting such account current, '[or by utilizing Cenvat credit] in the following manner".
7. It is clear from the terms of (b) above that the rule treats debiting "account current" and utilizing "Cenvat credit" alike. Because of the reference in Sub-rule (e)(ii) to Clause (b) utilization of Cenvat Credit also remains included in the terms debit to the account current.
8. The above understanding of the legal provision remains confirmed by the aforesaid decision of the Hon'ble High Court of Mumbai. The following with judgment makes this position clear:
"It is not in dispute that the petitioner who is manufacturer has defaulted on account of the facility extended to him to discharge his duty liability by debiting the account current or utilizing Cenvat credit. Under the said provisions where facility of payment of duty on fortnightly basis on removal of goods from the factory premises or from an approved place of removal is granted under the said Rule, in such contingency, it is provided that the manufacturer shall forfeit the facility to pay the dues in installments under this sub-rule for a period of two months, starting from the date of communication of an order passed by the proper officer in this regard and during this period the manufacture shall be required to pay excise duty for each consignment by debit to the account current referred to in Clause (b).
It is not disputed that the liability to pay duty can be discharged by debiting the account current or utilizing Cenvat credit, which is considered as good as making payment by debiting account current, in support of which reliance has been placed on the circular issued by the Central Board for Excise and Customs on 20.1.1998.
As such prima facie, the petitioner is entitled to utilize Cenvat credit for payment of Central Excise duty on the clearance of final product".
9. The payment of duty by the appellant from the Cenvat credit satisfies the requirement of Rule 173G(e) in view of the judgment of the Hon'ble High Court, Mumbai. Therefore, there was no violation of the rule and penalty was not attracted. Accordingly, the appeal is allowed, after setting aside the impugned order. The appellant shall be entitled to consequential relief, if any.