2018 (5) TMI 1339 - AT - Central Excise

Demand of interest - default in the payment of duty beyond thirty days from the due date - utilization of CENVAT credit in payment of duty - Held that - the payment of excise duty by utilizing the cenvat credit is not violative of Rule 8(3A) of the Central Excise Rules, 2002 - appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against modified order demanding interest only for defaulted period.

Analysis:
The appeal was filed by the Revenue against an order by the Commissioner (Appeals) modifying the Order-in-Original and demanding interest only from the respondent for a defaulted period. The case involved an assessee engaged in the manufacture of MS Ingots under a specific heading of the Central Excise Tariff Act, paying duty as determined under relevant sections. The assessee defaulted in duty payment beyond 30 days from the due date, discharging the duty liability monthly using cenvat credit instead of paying on a consignment basis. Show-cause notices were issued demanding excise duty, interest, and penalty. The Additional Commissioner held that the assessee cleared goods without paying duty in contravention of rules, denying cenvat credit utilization for duty payment, and confirming the demand with interest and penalty. The respondent appealed, and the Commissioner (Appeals) observed that interest payment for defaulted period sufficed, dropping penalties. The Revenue appealed this decision.

The Revenue argued that the impugned order was contrary to Rule 8(3A) and contended that the assessee intentionally flouted rules by not paying duty in cash on a consignment basis. The Revenue claimed that the findings lacked statutory backing. However, the Tribunal noted that Rule 8(3A) had been declared unconstitutional by the High Court of Gujarat in a specific case. The Department had appealed to the Apex Court for final determination on the rule's validity. Other High Courts and a Division Bench of the Delhi Tribunal had also held that payment of excise duty using cenvat credit did not violate Rule 8(3A) of the Central Excise Rules. Following these precedents, the Tribunal found no issue with the impugned order and dismissed the Revenue's appeal.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, finding no infirmity in the order and dismissing the Revenue's appeal. The judgment highlighted the constitutional validity of Rule 8(3A) and the legality of utilizing cenvat credit for excise duty payments, aligning with previous court decisions.