ORDER
Moheb Ali M., Member (T)
1. These stay applications arose out of the order of the Commissioner of Central Excise, Pune-II. In the impugned order, the Commissioner confirmed a duty of Rs. 49.05 lakhs and Rs. 57,71,186/-and ordered appropriation of the said amounts from the payments made. He . also imposed a penalty of Rs. 49,00,000/- and Rs. 1,85,95,907/-.
2. The applicants are manufacturers/processors of cotton and man-made fabrics falling under Chapters 52,54 and 55 of the Central Excise Tariff Act, 1985. They were availing of the facility of payment of duty of excise on fortnightly basis in terms of Rule 8(1) of the Central Excise Rules, 2001. The applicants paid duty of excise on removal of each consignment by debit of the part duty amount in the CENVAT account as they were facing a cute shortage of funds. By an order dated 4-6-2001, the Assistant Commissioner of Central Excise held that the applicants are defaulters and directed them to pay duty of excise on removal of each consignment by debiting the duty to account current in terms of Rule 8(4) of the Central Excise Rules. As the applicants were not in a position to clear the said goods on payment of duty through PLA, they started clearing them on fortnightly basis by debiting the CENVAT account to the extent of available balance in that account. Later, the applicants paid arrears of duty of excise along with interest in terms of Rule 8(4) of the said Rules. By a show cause notice dated 4-12-2003, the applicants were called upon to show cause why an amount of Rs. 49.05 lakhs being the amount of central excise duty, the payment of which was deferred during the period 1-1-2001 to 8-6-2001, and the interest payable thereon should not be adjusted against the respective payments made. The applicants were also called upon to pay Rs. 57,71,186/- for the period 9-6-2001 to 4-5-2002 under Section 11A(1) of the Central Excise Act. The applicants were also asked to show cause why Rs. 1,28,24,721/- being CENVAT credit wrongly utilised by the applicants during the period 9-6-2001 to 4-5-2002 should not be demanded.
3. The grievance of the applicants is that the case was adjudicated without affording a reasonable opportunity to them to explain the circumstances under which, during the period 1-1-2001 to 8-6-2001, they could not discharge the duty in accordance with law. It is also argued that there was no breach of the provisions of Rule 173G of the erstwhile Central Excise Rules and that there was no suppression or wilful mis-statement on their part and hence the larger period is not invocable.
4. Heard both sides.
5. During the currency of the forfeiture order dated 4-6-2001, the applicants were required to pay duty on consignment basis by debiting the duty in their account current. Inspite of the existence of this order, the applicants were clearing the goods by debiting duty in the CENVAT which is specifically prohibited under the Central Excise Rules. All such clearances during the forfeiture order have to be treated as goods cleared without payment of duty. Prima facie it appears that the order of the Commissioner is legal and correct. The applicants’ contention that because of paucity of funds they had to resort to removal of goods by debiting the CENVAT account is not tenable. We, therefore, direct the applicants to deposit Rs. 50 lakhs towards duty by 31-1-2005 as they failed to make out a strong prima facie case in their favour. Upon such deposit, further deposit of duty and penalty imposed on the company as well as penalty on the Managing Director are waived.
6. Compliance on 4-2-2005.