2006 (10) TMI 42 - AT - Central Excise

Cenvat/Modvat Date of payment of duty when inputs capital goods cleared is on monthly basis- Clearance affected after amendment Accordingly interest not to be demanded under section 11AB of C.E.Act 1944.

Summary

Issues involved:
1. Whether the amount for inputs cleared under Rule 3(4) of Cenvat Credit Rules, 2002 should be paid at the time of clearance or on the 5th day of the following month as per Rule 8 of Central Excise Rules, 2002.
2. Whether interest is payable in case of delayed payment for inputs cleared.
3. Levy of interest demand under Section 11AB of the Act from the date of clearance of inputs or the actual date of payment.

Analysis:
1. The respondents, engaged in manufacturing medicines, availed Cenvat Credit during May 2003 to April 2004 and cleared inputs/capital goods after bringing them into their factory. The duty was paid on goods cleared monthly in accordance with Rule 8 of Central Excise Rules, 2002. The duty was required to be paid at the time of clearance, not on a monthly basis, leading to interest leviable under Section 11AB of the Act for delayed payment.

2. The Commissioner (Appeals) referenced Rule 8 of Central Excise Rules, 2002, sub-rule (4) of Rule 3 of Cenvat Credit Rules, 2002, and a relevant notification. The Commissioner held that no interest could be demanded under Section 11AB for the period May 2003 to April 2004 due to a specific amendment. The impugned order was found to be legally sound, with no valid grounds presented by the Revenue in their appeal, resulting in the rejection of both appeals.

3. The judgment concludes that the impugned order by the Commissioner (Appeals) was legally sound, with no errors or illegality found. The appeals filed by the Revenue were devoid of merit, leading to their rejection by the Tribunal. The decision was pronounced in court, upholding the Commissioner's order and dismissing the Revenue's appeals.