Payment of Duty - Central Excise Practice Manual (OLD) - Central Excise

PAYMENT OF DUTY As per Rule 8 of the central excise rules, 2002 the duty, on the goods removed from the factory or warehouse in which goods are deposited without payment of duty, shall be paid on monthly basis on the following dates: 1. By the 5 th day of the following for each month (except for the month of March) - for all assesses excluding SSI units who are availing SSI exemption. (6 th day of the following for each month if paid through electronic mode) 2. By the 5 th day of the following month from the end of quarter - for the units availing SSI exemption (6 th day of the following for each month if paid through electronic mode). 3. By 31 st day of March for the month of March/Quarter ended March - for all assesses including SSI Manner of payment of duty: Payment of duty can be made in two ways: 1. By debiting the Cenvat Credit A/c maintained under the Cenvat credit Rules, 2004, or 2. By debiting the Personal Ledger A/c (PLA) also called Account Current maintained with the department. Mode of payment of duty: 1. By Demand Draft or by pay order - in this case the date on which payment is made is the date of payment to Government. 2. By cheque - the date of deposit of cheque in the bank A/c is the date of payment of duty provided it gets honoured later on. 3. E-payment - assessee should have bank's internet booking ID with whom he is registered. He is required to access the website of bank and make payment. Bank will print out challan and deliver the challans to department and assessee at his door step. Proof of payment of duty: There is no such provision in excise rules as invoice itself is the proof of payment of duty but in some cases (like where buyer insist) certificate may be issued by excise officer after verification. Consequences on Failure to pay duty: 1. If the assessee fails to pay duty by due date he will be liable to pay the outastanding amount along with the interest for the period starting from the due date till the date of actual payment. 2. If the assessee does not pay the outstanding amount within 30 days, the facility of payment of duty on monthly basis will be forfeited by the order AC/ DC: Either, for a period of 2 months starting from the date of passing of such order, or Till such date on which all dues including interest thereof are paid, whichever is later. Duty will be payable on removal of each consignment, and Duty has to paid only from PLA and not from Cenvat credit balance. Note: As assessee is ordered to make payment through PLA in case of default but he still makes payment (of both outstanding amount and interest) from Cenvat credit balance, it will not attract penalty but will be considered as an offence. PAN based registration no. Serial no. and date Details of credit (GAR-7 EX challan) Details of debit Final balance 4. PLA has to be prepared in triplicate using inedible pencil double-sided carbon. 5. Original and duplicate copies of PLA and copies of GAR-7 EX challan are to be detached at the end of each month to be submitted along with the monthly return or quarterly return in case of SSI units. 6. PLA account can be used only for payment of excise duty and not for other payments like rent, fines, penalties etc. These payments should be made through GAR-7 EX challan. If these are required to be paid through PLA, a separate account current under the group minor head 'E- Miscellaneous -1 Miscellaneous' may be opened with permission. Cenvat credit balance: The buyer of goods can avail Cenvat credit as soon as goods are received in the factory. But Cenvat credit available at the end of the month only can be utilized, even if duty is payable by 5 th or 15 th of following month. Hence Cenvat credit of all inputs and 50% of duty paid on capital goods is available as soon as goods enter the factory, even if book entry is made later. 3. If despite such order and restrictions, assessee clears goods without payment of duty, he will have to bear the consequences and penalties as applicable for removal of goods without payment of duty [Rule 8(3A)]. Goods can also be confiscated. Payment in case of closure of bank: 1.Where assessee knows about closure of bank in advance - the assessee should deposit adequate amount in PLA in advance. 2. Where assessee does not knows about closure of bank in advance (in case of strike, riots etc. but does not include where only assessee's bank is closed) - commissioner should issue a trade notice requiring assesses to send cheque to CAO (chief accounts officer). After strike, the CAO will deposit the cheque in bank and duplicate/ triplicate copy will be sent to assessee. Bank charges will be paid by debiting PLA. Is option to pay duty on consignment-wise available? Where the assessee desires to pay the duty on removal of each consignment, he can do so by intimating to Assistant Commissioner of Central Excise in writing. Personal Ledger Account (PLA): It is opened by every central excise assessee who had obtained the 15 digit PAN based registration number. PLA is an account current in which advance money is deposited, against which excise duty can be paid by debiting the account. The PLA is credited when duty is deposited (remitted) in bank by GAR-7 EX challan. 1. Debit in PLA is usually made on monthly basis. It is an effective payment of duty and not merely adjustment entry. 2. There is no requirement of minimum credit balance in PLA. It is sufficient if there is balance at the time of debit in PLA. 3. PLA contains the following details - The effect of this forfeiture will be such that -