2007 (10) TMI 167 - AT - Central Excise

Whether an amount equal to 8% of the value of the exempted goods u/r 6(3)(b) of CCR would be payable at the time of clearance from the factory or at the end of the month, as per Rule 8 CEA - no provision for manner of payment of the amount u/r 6(3)(b) - So, the provisions of Rule 8(1) of CE Rules would be construed u/r 6(3)(b) of CCR - respondent rightly paid the amount u/r 6(3)(b) of CCR in the manner envisaged u/r 8(1) of the Central Excise Rules

Summary

Issues:
Interpretation of Rule 6(3)(b) of Cenvat Credit Rules, 2002 regarding the payment of an amount equal to 8% of the value of exempted goods. Applicability of Rule 8(1) of Central Excise Rules, 2002 for payment timing. Liability for interest on delayed payment.

Analysis:
The appeal revolved around the question of whether the payment under Rule 6(3)(b) of Cenvat Credit Rules, 2002 should be made at the time of clearance from the factory or at the end of the month as per Rule 8(1) of Central Excise Rules, 2002. The Assistant Commissioner contended that the payment under Rule 6(3)(b) is not a duty and should be paid at the time of clearance, imposing interest for late payment. The Commissioner (Appeals) disagreed and allowed the respondent's appeal, leading to the Revenue's appeal.

The Revenue argued that the payment under Rule 6(3)(b) is not a duty, and thus, Rule 8(1) of Central Excise Rules does not apply. They claimed the respondent should pay the amount at the time of removal of exempted finished goods. The respondent's failure to pay at clearance led to interest charges, as per the revenue's stance. However, the Tribunal noted that Rule 6(3)(b) specifies the payment of 8% at the time of clearance from the factory, not at the end of the month, as per Rule 8(1) of Central Excise Rules. Therefore, the contention that Rule 8(1) applies was deemed unsustainable.

Further examination revealed that the payment under Rule 6(3)(b) involves debiting CENVAT Credit or other methods, with provisions for recovery and interest. The Tribunal referenced Explanation-I and II of Rule 6, emphasizing recovery with interest akin to wrongly taken CENVAT credit. Citing Section 2A of the Central Excise Act, 1944, the Tribunal highlighted the inclusion of CENVAT in the definition of "duty." Drawing from legal precedent, the Tribunal concluded that the payment method under Rule 8(1) of Central Excise Rules should be construed for Rule 6(3)(b) of Cenvat Credit Rules due to the absence of specific provisions.

Ultimately, the Tribunal upheld the Commissioner (Appeals) decision, determining that the respondent correctly paid under Rule 6(3)(b) in line with Rule 8(1) of Central Excise Rules. Consequently, the Revenue's appeal was rejected, affirming the payment timing interpretation under Rule 6(3)(b) of Cenvat Credit Rules.