2008 (7) TMI 658 - AT - Central Excise

Summary

Issues involved: Appeal against the rejection of refund claim for interest paid on delayed duty payment.

Summary:
1. The appeal was filed by M/s. Arjay Apparel Industries Limited regarding the payment of duty on goods removed after a delay, utilizing Cenvat credit earned in a subsequent month, which was not allowed u/s Rule 3(3) of Cenvat Credit Rules 2002. The duty was eventually paid from PLA after a delay of 292 days, along with interest as per Rule 8(3) of CER 2002. The appellants sought a refund of the interest paid, citing precedents where interest was not payable if duty was paid before any Show Cause Notice was issued.

2. The lower authorities rejected the refund claim, stating that the duty payment was made only after the department pointed out the lapse, not voluntarily. The Tribunal, after considering both sides' arguments, found that there was no prohibition on the assessee paying the short paid amount using Cenvat credit. As the duty was eventually paid with a slight delay and no demand was made for the delay period, the interest payment was deemed unnecessary. Therefore, the Tribunal allowed the appeal and ordered the refund of the interest paid.

(Order dictated and pronounced in the open Court)