2013 (12) TMI 1398 - HC - Central Excise

Goods detained because of non-payment of duty - Manner of payment of duty under Rule 8(3A) - Whether the petitioner was correct in making use of the Cenvat credit for the purpose of discharging the duty liability Held that - There is no question of invoking the Cenvat Credit Rules, 2004 in its entirety except for understanding the meaning of the term duty or duty of excise - the rigour of Section 8(3A) operates notwithstanding anything contained in sub-rule (1) and (4) of Rule 3 of Cenvat Credit Rules - Sub-rule 4(b) of Cenvat Credit Rules permits utilisation of Cenvat credit for payment of duty of excise on any final product - This provision makes the position very clear that Cenvat credit cannot be used as a matter of right for payment of duty of excise, in case the assessee defaults in payment of duty before the cut off period under Rule 8(3A) of Central Excise Rules, 2002. The purpose of explanation that the expression duty or duty of excise shall also include the amount payable in terms of the Cenvat Credit Rules, 2004, would not amount to a permission for utilising the Cenvat credit for paying the excise duty - Rule 8(3A) is very specific when it provided that the entire duty should be paid without utilising the Cenvat credit - There is no question of utilising the explanation for the purpose of using the Cenvat credit for paying the outstanding duty amount Thus, the assessee is liable to pay the excise duty in accordance with the Central Excise Rules, 2002 with interest for the belated period and there is no provision for utilising the Cenvat credit for such belated payment - The petitioner is liable to pay the entire duty amount with interest without utilising the Cenvat credit - decided against Petitioner.

Summary

Issues:
1. Interpretation of Rule 8(3A) of the Central Excise Rules, 2002 regarding payment of excise duty.
2. Validity of using Cenvat credit for discharging excise duty.
3. Compliance with statutory provisions for payment of excise duty.
4. Authority's discretion in recognizing payment made through Cenvat credit.
5. Applicability of judicial precedents in similar cases.

Analysis:
1. The petitioner, engaged in manufacturing, faced a delay in paying excise duty due to financial crisis, utilizing Cenvat credit for partial payment. The main contention was the interpretation of Rule 8(3A) of the Central Excise Rules, 2002, regarding the payment of excise duty beyond the due date.

2. The second respondent contended that using Cenvat credit for duty payment is impermissible by law. The petitioner argued that the payment, including Cenvat credit utilization, was valid, citing the explanation to Rule 8(3A) and a previous judgment supporting their position.

3. The Court analyzed Rule 8(3A) which mandates payment without utilizing Cenvat credit until the outstanding amount is paid, indicating consequences for non-compliance. The explanation clarified the inclusion of Cenvat credit in the term 'duty,' but did not permit its use for belated payments.

4. Judicial precedents were cited, emphasizing the statutory restriction on using Cenvat credit for delayed duty payments. The Court highlighted that previous judgments did not authorize such practices, reinforcing the legislative intent behind Rule 8(3A).

5. Ultimately, the Court upheld the authority's decision, directing the petitioner to pay the entire duty amount with interest without utilizing Cenvat credit. Compliance with statutory provisions was deemed necessary, and the goods would only be released upon full payment as demanded by the second respondent.

In conclusion, the writ petition was dismissed, and no costs were awarded, affirming the requirement for full excise duty payment without utilizing Cenvat credit for belated payments.