ALPHINE PHARMACEUTICALS Vs. COMMISSIONER OF C. EX., HYDERABAD

JUDGEMENT

(1.) THIS appeal of the assessee is directed against the order of Commissioner (Appeals) for recovery of duty of Rs. 16,848/ - from them for the month of May, 2008. The appellant has requested for disposal of their appeal on merits. They do not want to be personally heard. I have examined the records and heard ld. DR who has also favoured final disposal of the appeal. Accordingly, after rejecting the stay application, I take up the appeal.

(2.) THE appellant is engaged in the manufacture of medicaments. During the material period, they were liable to pay duty of excise on a quarterly basis. The duty for the month of March, 2008 had to be paid on or before the 31st of that month. For the first quarter (April to June) of 2008 -09, the duty had to be paid on or before the 5th day of July, 2008. Similarly, for the second quarter (July to September) of the fiscal year, the duty had to be paid on or before the 5th day of October, 2008. The duty payable for the clearances made during March, 2008 was Rs. 3,14,237/ - but the amount of duty paid by the appellant in that month was Rs. 3,07,237/ - only. The arithmetical error was detected later and the differential amount of duty (Rs. 7,000/ -) was paid on 4 -6 -2008. The interest on this amount of duty for the period of delay was paid on 29 -7 -2008. For the quarter, April to June, 2008, the total duty payable was Rs. 39,832/ - on finished goods and inputs cleared as such. Towards this liability, the appellant paid an amount of Rs. 22,984/ - from PLA and an amount of Rs. 16,848/ - from CENVAT account, the latter attributable to the inputs cleared as such.

(3.) AS per Rule 8(3A) of the Central Excise Rules (CER), 2002, if the assessee defaults in payment of duty beyond 30 days from the due date, they shall pay excise duty on all subsequent clearances without utilizing CENVAT credit till the outstanding amount for the period of default is paid with interest, notwithstanding anything contained in sub -rules (1) and (4) of Rule 3 of the CENVAT Credit Rules, 2004. In the event of failure to do so, the assessee is liable to be penalized on the premise that the goods which were cleared on payment of duty from CENVAT credit account have been cleared without payment of duty. The Department invoked these provisions in a show -cause notice dated 25 -3 -2009 issued to the assessee for recovery of duty of Rs. 44,017/ - (including education cess) from PLA in respect of clearances made in May and September, 2008, interest thereon under Section 11AB of the Central Excise Act and also for imposing penalty. The adjudicating authority held that the assessee was eligible for utilization of CENVAT credit for payment of duty on the goods cleared in September, 2008 and accordingly dropped the demand of duty for September, 2008. It also found that the clearances of finished goods in May, 2008 were made on payment of duty from PLA only without utilizing CENVAT credit. In the result, the demand of duty for May, 2008 also came up dropped. A penalty of Rs. 5,000/ - was, however, imposed on the assessee under Rule 27 of the CER, 2002. The Order -in -Original was reviewed in the Department and an appeal was preferred to the Commissioner (Appeals) against the dropping of demand of duty for the month of May, 2008. It was contended before the appellate authority that the assessee was not authorized, under Rule 8 of the CER, 2002, to use CENVAT credit for payment of duty till 29 -7 -2008 (the date on which the defaulted amount of duty for the month of March, 2008 was paid with interest). This contention was accepted by the Commissioner (Appeals) and accordingly the lower authority was directed to recover appropriate amount of duty from the assessee. The present appeal of the assessee says that the appellate Commissioner did not consider certain decisions cited by them.