2006 (2) TMI 374 - AT - Central Excise

Summary

Issues Involved:
1. Default in payment of duty leading to withdrawal of facility.
2. Payment of duty through Cenvat account instead of PLA.
3. Imposition of penalty and interest.
4. Conflict in decisions regarding utilization of Cenvat credit during forfeiture period.
5. Reference to larger bench for decision on payment of duty during forfeiture period.

Analysis:
1. The case involved the appellants, engaged in manufacturing P.P. Medicines, who defaulted on duty payment in August, November, and December 2001, leading to withdrawal of the facility of monthly duty payment. The Deputy Commissioner directed duty payment on consignment basis through PLA for two months from the order date.

2. The appellants cleared goods by paying duty on consignment basis but used Cenvat account instead of account current. This led to show cause notices proposing duty demands and penalties. The Assistant Commissioner confirmed duty demands, penalties, and interest, with the appellate authority allowing re-credit of Cenvat but reducing the penalty. The appellants challenged this order.

3. The central issue was whether the assessee could pay duty from Cenvat account during the forfeiture period and if penalty was applicable. Previous Tribunal decisions indicated interest and penalties for failure to pay through PLA during forfeiture. However, the Bombay High Court held that Cenvat credit could be used during this period, which was followed by some Tribunal decisions.

4. The Tribunal noted conflicting views on the matter and decided to refer the case to a Larger Bench to resolve key questions related to duty payment during the forfeiture period, specifically whether non-payment through PLA attracts interest and penalties.

5. The judgment highlighted the importance of proper payment methods during duty forfeiture periods and the need for clarity on utilizing Cenvat credit. The conflicting decisions necessitated a Larger Bench's intervention to provide a definitive ruling on the matter.

This detailed analysis captures the essence of the legal judgment, addressing each issue comprehensively while maintaining the legal terminology and significance of the original text.