ORDER
V.K. Agrawal, Member (T)
1. M/s. Ghaziabad Organics Ltd. are challenging the confirmation of demand and imposition of penalty by this Appeal.
2. Shri Bipin Garg, learned Advocate mentioned that the Appellants manufacture excisable goods falling under Chapter 29 of the Schedule to the Central Excise Tariff Act and discharged the duty liability on fortnightly basis under the Central Excise Rules; that the scrutiny of the returns for the period January, 2001 to March, 2001 revealed that they had paid the duty amounting to Rs. 10,30,893/- from their CENVAT account which was not available on due dates; that accordingly the Deputy Commissioner has confirmed the demand of duty and imposed equivalent amount of penalty which has been upheld by the Commissioner (Appeals) in the impugned order. Learned Advocate submitted that as per the provisions of the Central Excise Rules, the duty for the first fortnight of the month was payable by the 20th and Central Excise duty for the second fortnight of the month was payable by 5th of the following months; that, however, relevant Central Excise Rules provided that the Cenvat credit can be utilised only from the balance as existing on the 15th day of the month and not on 20th of the month; that similarly payment of duty for the second fortnight from Cenvat credit account cannot exceed the balance of the last day of the month; that in the first fortnight of January, 2001, they had paid the duty amounting to Rs. 3,34,840/- out of Cenvat credit earned after 15th of January, 2001; that they had paid the duty by debiting Cenvat credit wrongly to the following extent in the subsequent fortnights :
(1) For the first fortnight of February, 2001 Rs. 2,06,112/;
(2) For the second fortnight of February, 2001 Rs. 2,74,261/-; and
(3) First fortnight of March, 2001 Rs. 2,15,680/-.
He contended that once it is held by the Department that they have wrongly paid the duty from the Cenvat credit account in the first fortnight of January, 2001, the same is payable in cash or through the PLA, the amount of Cenvat account utilised by them in the first fortnight of January, 2001 will get credited to their account. Consequently there will be no overdraft from the Cenvat credit account in the remaining fortnights as they will get credit of Rs. 3,34,840/- in their Cenvat credit account. He therefore contended that they arc liable to pay only Rs. 3,34,840/- and not the entire amount confirmed against them.
3. Learned Advocate has submitted written submissions in which it has been mentioned that there was a factual mistake in the arguments advanced during the hearing; that the Department has infact calculated the demand of duty for subsequent fortnights after adjusting first overdrawal of Rs. 3,34,840/- He has, further, submitted that the overdrawal was not made by the Appellants with a mala fide intention and was only due to unawareness of law; that Rule 57AB of the Central Excise Rules, 1944 was amended in August, 2000 by Notification No. 48/2000-Ccntral Excise (N.T.), dated 18-8-2000 by which the restrictions on the use of CENVAT credit was introduced; that it appears that even the Department was not aware of this amendment as the show cause notice was issued only in December, 2001; that the overdrawal was taken by them in the months of January to March, 2001. He, therefore, requested that no penalty is imposable on the Appellants.
4. Shri S.C Kushkarana, learned Departmental Representative, countered the arguments by reiterating the findings as contained in the impugned order and emphasised that as the duty has been paid out of the Cenvat credit which was not permissible to them, they are liable to discharge the duty in cash.
5. We have considered the submissions of both the sides. In view of the written submissions made by the Applicants in which they have admitted that the total overdrawal by them was Rs. 10,30,893/- which is payable by them in cash, we upheld the demand of duty. As the Appellants had removed the excisable goods by debiting the duty from Cenvat credit account wrongly, the goods have been removed without payment of appropriate Central Excise duty. In view of the fact that the goods have been removed without payment of appropriate duty, penalty is imposable on them. The amendment no doubt was carried out in August, 2000 but the overdrawal has been effected by the Appellants during the months of January, 2001 to March, 2001 which cannot be regarded as a transition period. Accordingly the penalty is imposable on them. However it is not a fit case warranting imposition of equivalent amount of penalty. The quantum of penalty imposed is on the higher side and the interest of justice will be met if a penalty of Rs. One lakh is imposed on them. We, therefore, reduce the penalty to Rs. One lakh. The Appeal is disposed of in these terms.