2013 (11) TMI 1390 - AT - Central Excise

Interest on delayed payment under Rule 3 (5) of the Cenvat Credit Rules, 2004 Held that - If there is delay in payment of this amount, for whatever reason, interest would be chargeable in terms of the provisions of sub-rule (3) of Rule 8 - if the assessee fails to pay the amount of duty, he shall be liable to pay the outstanding amount along with interest at the specified rate - Interest would be attracted on the outstanding amount for the period starting from the first day after due date till the date of actual payment of the outstanding amount - When the interest on duty payable on the goods cleared in a month including the amount payable under Rule 3(5) of Cenvat Credit Rules, is linked with the period of delay from the due date, the interest would be attracted whenever there is delay Decided in favour of Revenue.

Issues:
- Whether interest is chargeable for the delay in payment of cenvat credit availed inputs used for repair of goods under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11 AB of the Central Excise Act, 1944.

Issue Analysis:

The judgment revolves around the issue of whether interest is chargeable for the delay in payment of cenvat credit availed inputs used for repair of goods under Rule 14 of the Cenvat Credit Rules, 2004 read with Section 11 AB of the Central Excise Act, 1944. The respondents, who are manufacturers of various electronic equipment, were availing cenvat credit of central excise duty paid on inputs used in the manufacture of final products. The dispute arose when the department demanded interest on the cenvat credit availed inputs used for repair of goods, which were not paid by the due date. The Asstt. Commissioner confirmed the interest demand, but the Commissioner (Appeals) set aside the order, stating that interest is payable only when there is insufficient balance in the account at the time of credit availed. The Revenue appealed against this decision, and the respondents filed a cross objection.

The judgment highlights that the repair activity does not amount to manufacturing, making the inputs used for repair ineligible for cenvat credit. When cenvated inputs are used for repairs, it is treated as clearance of cenvated input, and an amount equal to the cenvat credit availed is required to be paid under Rule 3(5) of the Cenvat Credit Rules. The issue in question was whether interest would be chargeable for the delay in payment of this amount. The judgment clarifies that interest is attracted when there is a delay in payment, as per Rule 8(4) of the Central Excise Rules, which includes the amount payable under the Cenvat Credit Rules. The judgment emphasizes that interest is linked with the period of delay from the due date, and if the amount is not paid by the 6th of the following month, interest at the specified rate becomes payable. The Tribunal differentiated this case from previous judgments, stating that interest would be attracted whenever there is a delay in payment, regardless of the availability of sufficient cenvat credit balance with the assessee.

In conclusion, the Commissioner (Appeals)'s order was set aside, and the order-in-original passed by the Asstt. Commissioner was restored. The judgment clarifies that interest is chargeable for the delay in payment of cenvat credit availed inputs used for repair of goods, as per the provisions of Rule 8 of the Central Excise Rules, 2002. The decision is based on the interpretation of relevant rules and previous tribunal judgments, emphasizing the obligation to pay interest for delayed payments of cenvat credit availed inputs used in non-manufacturing activities like repairs.

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