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TMI Blog2015 (8) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... ime, permitted payment of duty every fortnight instead of consignment basis. In this manner on the goods cleared in the first fortnight the duty was payable by 20th of the said month and for the goods cleared during the second fortnight the duty was payable by 5th May of the next month. The Revenue Authorities found that in the months of August, October and November 2000, the appellants had not paid the central excise duty on time. This led to the passing of an order by the Revenue suspending the facility of clearing goods of paying the duty every fortnight and interest. Instead, the appellant was directed to make the payment of duty on consignment basis for a period of two months, i.e., from 19.12.2000 to 18.02.2001. 3. After the said orders were passed the appellant started paying duties on consignment basis. During this period the appellant paid around Rs. 7 crores in cash through account current, i.e., PLA. However, the appellant also had credit in their Cenvat Account. A sum of Rs. 31 lakhs (approximately) was utilized from the Cenvat Account for payment of excise duty in the aforesaid period. The authorities took the view that the appellant could not have utilized the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oneously refunded. It can be done within one year from the relevant date by serving show cause notice on the person chargeable with the duty. It is not necessary to state in detail the procedure prescribed therein. For our purposes it is sufficient to mention that Section 11AA of the Act provides that where a person chargeable with duty determined under Section 11A fails to pay such duty within three months from the date of such determination, he is liable to pay interest on the delayed period which is at the rate not below 18% and not exceeding 36% p.a. as for the time being fixed by the Central Government by Notification in the Official Gazette. 7. Chapter III of the Rules deals with 'Levy and Refund of, and Exemption from Duty'. Rule 9 thereof stipulates time and manner of payment of duty and sub-rule 1 thereof reads as under: "Rule 9: Time and manner of payment of Duty:-(1) No excisable goods shall be removed from any place where they are produced, cured, manufactured or any premises appurtenant thereto, which may be specified by (Commissioner) in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until (excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase may be. (c) the duty of excise shall be deemed to have been paid for the purpose of these rules, on excisable goods removed in the manner prescribed in this sub-rule, and the credit of such duty, as may be prescribed, under any rule, will be permissible. (d) If the manufacturer fails to pay the amount of duty payable by the due date, he shall be liable to pay the outstanding amount along with interest at the rate of twenty four per cent per annum on the outstanding amount, for the period starting with the first day after due date till the date of actual payment of the outstanding amount. (e) If the manufacturer defaults on account of any of the following reasons, namely:- (i) full payment of any one instalment is discharged beyond a period of thirty days from the date on which the instalment was due in a financial year, or (ii) the due date on which full payment of instalments are to be made is violated for the third time in a financial year, whether in succession or otherwise, then the manufacturer shall forfeit the facility to pay the dues in instalments under this sub-rule for a period of two months, starting from the date of communication of an order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on this delayed payment, appellant was liable to pay interest @ 24% p.a. from the period from 19.12.2000 to 20.05.2002. Order-in-Original dated 13.06.2002 passed by the Commissioner affirming the demand in show cause notice has been confirmed by the Tribunal. The reason given by the Tribunal is that it was admitted by the appellant that facility of payment of duty by installments had been withdrawn for two months. It was also admitted by the appellant that during this period, the appellant discharged a portion of duty through Cenvat Credit Account but afterwards paid this amount of duty in cash and, therefore, admitted that payment of duty through Cenvat Credit Account was not permissible under the provisions of sub-rule (e) of Rule 173G(1) of the Rules. According to the Tribunal, since these were the admitted facts, the interest @24% p.a. which is prescribed for late payment, was rightly claimed by the Department. 13. At the outset, we are compelled to remark that the Tribunal was not correct in observing that merely because the appellant paid the aforesaid portion of duty subsequently in cash, it had accepted the legal position that payment of duty through Cenvat Credit Accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment, i.e., on everyday basis. In this context, the question that arises is as to whether such a duty has to be necessarily paid only by debit to the account current or it can be paid through Cenvat Credit as well. 15. For answering this question, first thing that is necessarily to be pointed out is the purport behind Rule 49 and Rule 173G of the Rules. Rule 49 enables the assessee to pay excise duty on fortnightly basis on removal of goods from the factory premises or from an approved place of removal but for this Rule the assessee is required to pay duty on removal of each consignment, i.e. on consignment to consignment basis. That is what is provided in Rule 9 of the Rules which mandates that no excisable goods shall be removed from the place where they are produced, cured or manufactured or any premises pertained thereto, which may be specified by the Commissioner in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until excise duty leviable thereon is determined and indicated on each application in the proper form or each gate pass, as the case may be, presented to the proper officer at such place and in such manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the excise authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. We are here really concerned with credit that has been validly taken, and its benefit is available to the manufacturer without any limitation in time or otherwise unless the manufacturer itself chooses not to use the raw material in its excisable product. The credit is, therefore, indefeasible. It should also be noted that there is no co-relation of the raw material and the final product; that is to say, it is not as if credit can be taken only on a final product that is manufactured out of the particular raw material to which the credit is related. The credit may be taken against the excise duty on a final product manufactured on the very day that it becomes available. 18. It is, therefore, that in the case of Eicher Motors Ltd. v. Union of India [1999 (106) E.L.T. 3] this Court said that a credit under the Modvat scheme was "as good as tax paid." 18. When we understand the character of Cenvat Credit in the aforesaid manner, the answer to the question posed easily becomes available, namely, even during the period when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and under the cover of invoice prescribed under Rule 52A. The inputs can also be removed as such or after they have been partially processed by the manufacturer of the final products to a place outside the factory under the cover of a challan specified in that behalf by the Central Board of Excise and Customs, for the purpose of test, repair etc. carrying out any operation necessary for manufacture of final products and return the same to his factory within the specified period. The inputs on which credit has been taken may be used for the manufacture of final products or can be removed after payment of duty for home consumption. Rule 57-I provides for recovery of credit wrongly availed of or utilised in an irregular manner. It provides for recovery of the duty credit of which was wrongly availed and if the manufacturer has taken the credit by reason of fraud or willful misrepresentation, suppression of facts etc. with the intention to evade payment of duty then he shall, apart from his liability to pay the amount equivalent to the credit, be liable to pay penalty equal to the same amount plus interest under Section 11AA. 21. The Scheme is thus, a self-contained one, dealing with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the input credit will become unworkable and ineffective. It has to be noticed as rightly pointed by the counsel appearing for the petitioner that the rule making authority took notice of this lacuna and by the Central Excise Rules, 2002 - second amendment 2005, which came into force from 1st April, 2005, the Central Excise Rules 2002 was amended and Rule 3A was inserted which reads as follows: "If the assessee defaults in payment of duty by the date prescribed in sub-rule (2) and the same is discharged beyond a period of thirty days from the said date, then the assessee shall forfeit the facility to pay the duty in monthly instalments under sub-rule (1) for a period of two months, starting from the date of communication of the order passed by the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in this regard or till such date on which all dues including interest thereof are paid, whichever is later, and during this period notwithstanding anything contained in sub-rule (4) of rule 3 of CENVAT Credit Rules, 2004, the assessee shall be required to pay excise duty for each consignment by debit to the account current and ..... 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