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2014 (9) TMI 657 - AT - Central ExciseDelayed payment of duty - Utilization of CENVAT Credit - Interest u/s 11AB - Penalty u/s 11AC - Held that:- When an assessee defaults in payment of duty and if the default continues for a period beyond 30 days from the due date, then the assessee has to pay excise duty for each consignment at the time of removal, without utilizing the Cenvat Credit till the date the assessee pays the outstanding amount including interest thereon. Therefore, the duty demand is not in respect of defaulted amount but in respect of the goods cleared subsequently during the default period. As per the show-cause notice, during default period the assessee cleared the goods on which duty liability was ₹ 13,43,70,590/-/. Out of this amount the assessee discharged duty liability to the extent of ₹ 2,38,10,905/- through PLA and ₹ 11,05,59,585/- through Cenvat Credit account. The discharge of duty liability through Cenvat Credit account during the period of default is clearly prohibited under Rule 8 (3A). Therefore, this amount should have been made good by the assessee by paying it in cash along with interest for the delayed payment and thereafter, the assessee should have been allowed to take re-credit of this amount in the Cenvat Credit Account inasmuch as debits have been made to the equivalent extent in the Cenvat Credit account. In the case of defaults, the prohibition under Rule 8 (3A) for utilizing Cenvat Credit account is not with reference to the arrears but to the entire credit lying in the account and therefore the assesse has to pay excise duty through account current for each consignment at the time of removal. Since the Cenvat Credit was unavailable, utilizing the same for payment of duty was an exercise in nullity and could not be recognized as payment towards duty. in respect of goods cleared subsequently, the appellant did not discharge the excise duty liability through PLA account. Therefore, there was non/short payment of duty. Once there is a short payment of duty, the same ought to be recovered invoking the provisions of Section 11A of the Act. Once the provisions of Section 11A comes into picture, and the demand is sustainable under the said section, the liability to pay interest under Section 11AB shall also arise. Therefore, there is no merit in the contention of the appellant that the provisions of Section 11A or 11AB will not come into picture at all. However, in the instant case, we observe that the adjudicating authority has committed an error by holding that the payment made through Cenvat Credit account during the default period is sufficient which is not what the law mandates. matter remanded back for fresh consideration - Decided in favour of assessee.
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