2013 (6) TMI 180 - AT - Central Excise

Requirement to pay duty only through PLA when facility to pay the duty under fortnightly basis not available during the forfeiture period - Held that - A combined reading of the order passed by CESTAT and Elson Packaging Pvt. Limited 2004 (4) TMI 137 - CESTAT MUMBAI clearly convey that during the forfeiture period duty had to be paid only through Account Current (PLA) and any default on that aspect will make the goods cleared as a case of clearance without payment of duty and other consequences and penalties as provided in the Central Excise Rules shall follow. The consequences of goods cleared without payment of duty on the said defaults will mean discharge of duty along with interest and also a liability to face penalty. Therefore confirmation of demand and interest have been correctly made by Commissioner (Appeals) in his order in appeal. There is no doubt that appellant will be entitled to the credit what he has utilised in payment of Central Excise duty earlier when the entire default period duty and interest is paid in cash or through PLA. Equivalent penalty imposed - Held that - Penalty is imposable under Rule 173Q (1) of Central Excise Rules 1944 or Rule 25(1) of the Central Excise Rules 2001 because appellant s conduct has led to an act which is deemed to be clearances without payment of duty and also the act on the part of the appellant is liable to penalty. However it is not obligatory to impose penalty equivalent to the duty demanded under Rule 173Q of the Central Excise Rules. As all the transactions were properly recorded by the appellant therefore a penalty of Rs.One lakh upon the appellant will meet the ends of justice as reduced from Rs.5, 57, 138/-.

Summary

Issues:
- Interpretation of Rule 173G(1)(e) of the Central Excise Rules, 1944 regarding payment of duty during a forfeiture period.
- Applicability of penalty under Rule 173Q (1) of Central Excise Rules, 1944 or Rule 25(1) of the Central Excise Rules 2001.

Analysis:
1. The appeal involved a dispute regarding the requirement for the appellant to pay duty only through PLA during a forfeiture period when the facility to pay duty under a fortnightly basis was not available. The initial order confirmed a demand of Rs.5,57,138/- along with interest and penalty, which was later reduced to Rs.40,000/-. The case was taken to the Hon'ble High Court of Gujarat twice, with directions to reconsider the matter based on previous judgments. The issue revolved around the interpretation of Rule 173G(1)(e) and whether duty could be paid through CENVAT Credit Account during the forfeiture period.

2. The appellant failed to appear for hearings on multiple occasions, leading to arguments presented by the learned A.R. that duty cannot be paid from the CENVAT Credit Account based on previous judgments. The relevant period's restrictions under Rule 173G(1)(e) were highlighted, emphasizing the consequences of default and the requirement to pay excise duty through the account current during the forfeiture period.

3. The interpretation of Rule 173G(1)(e) by CESTAT and the Hon'ble High Court in the case of Elson Packaging Pvt. Limited clarified that duty had to be paid only through Account Current (PLA) during the forfeiture period. Any default in payment would result in goods being cleared without duty payment, leading to interest, penalties, and other consequences as per the Central Excise Rules.

4. The judgment upheld the confirmation of demand and interest by the Commissioner (Appeals) based on the requirement to pay duty through PLA during the forfeiture period. The appellant could avail credit for duty paid earlier upon settling the default period's duty and interest in cash or through PLA.

5. Regarding the imposition of a penalty, it was held that the appellant's conduct deemed as clearances without payment of duty warranted a penalty under Rule 173Q (1) of Central Excise Rules, 1944. However, the penalty was reduced from Rs.5,57,138/- to Rs.1,00,000/- considering proper recording of transactions by the appellant.

6. The appeal was disposed of with the above decisions pronounced on 10.5.2013, emphasizing the requirement to pay duty through Account Current during forfeiture periods and the imposition of a reduced penalty based on the appellant's conduct and recorded transactions.