2003 (9) TMI 164 - AT - Central Excise

Summary

Issues:
- Whether interest can be demanded from the appellant for delayed payment of Central Excise duty.

Analysis:
The appeal in question involved the issue of whether interest could be demanded from the appellant, a manufacturing company, for delayed payment of Central Excise duty. The appellant, engaged in manufacturing Pig Iron and scrap of iron, had faced delays in paying duty as per the Central Excise Rules. The appellant argued that they were directed to pay duty on a consignment basis instead of fortnightly basis for a specific period due to payment delays. The appellant contended that they made duty payments through both PLA and Cenvat Credit account, with a small amount paid through the latter. The appellant argued that using Cenvat Credit for duty payment was permissible and that there was no non-payment or short payment of duty. They further claimed that the interest provisions should not apply as the duty was paid, albeit through the wrong mode. The appellant emphasized that the interest under Rule 173G of the Central Excise Rules should not be charged as the duty was paid on a consignment basis, not fortnightly. Additionally, the appellant argued that the use of Cenvat Credit for duty payment was a bona fide mistake and should not warrant interest imposition.

In response, the Departmental Representative contended that the appellant's use of Cenvat Credit for duty payment during the specified period was a default under Rule 173G(1) of the Central Excise Rules. The Departmental Representative highlighted that the appellant forfeited the facility to pay duty in instalments for two months due to default and was required to pay duty through PLA only, not Cenvat Credit. The Departmental Representative argued that the Commissioner's finding in the impugned order emphasized the importance of actual revenue crediting in the Government account through cash payment for avoiding undue financial accommodation to defaulters, leading to interest liability.

Upon considering the arguments from both sides, the Tribunal found that the appellant's default in discharging duty liability on due dates led to the withdrawal of the instalment payment facility for two months. It was noted that the appellant paid duty through Cenvat Credit during this period, which was not permissible under the rules. The Tribunal agreed with the Commissioner's finding that the duty payment mode was incorrect, leading to non-payment of duty during the specified period. As the duty was paid through Cenvat Credit, which was not allowed, the default in payment continued, warranting interest payment under Rule 173G(1) of the Central Excise Rules. The Tribunal upheld the Commissioner's decision, stating that the duty should have been paid by the due date, which was the clearance date of the goods. Consequently, the appeal was rejected, and the appellant was liable to pay interest for the delayed payment of Central Excise duty.