2001 (10) TMI 958 - AT - Central Excise

Summary

Issues:
- Appeal against denial of excise duty payment from RG23A Part-II account.
- Interpretation of Rules 49, 57AB, 173G of Central Excise Rules.
- Availability and utilization of CENVAT credit for duty payment.
- Provisions regarding payment of excise duty in Central Excise Rules.
- Discharge of duty liability by debiting PLA or utilizing CENVAT credit.
- Restrictions on utilization of CENVAT credit as per Rule 57AB.
- Timing and availability of CENVAT credit for duty payment.

Analysis:
The appeal was filed by M/s. Surya Vinayak Industries Ltd. challenging the denial of excise duty payment from RG23A Part-II account as per Order-in-Appeal No. HKS(522)CE/2001. The appellant, represented by Shri Gopal Prasad, argued that due to financial constraints and lack of CENVAT credit, they were unable to pay the duty of Rs. 34,80,000 for the second fortnight of February 2001. They contended that the rules allowed for duty payment by debiting PLA or utilizing CENVAT credit, emphasizing that the restrictions imposed on CENVAT credit utilization were not explicitly mentioned in Rule 173G.

In response, Shri Mewa Singh, representing the respondent, highlighted the specific provisions of Rule 57AB regarding the utilization of CENVAT credit, stating that duty could only be discharged using the credit available on specific dates, i.e., the 15th day of the month for the first fortnight and the last day of the month for the second fortnight. It was argued that since the appellants did not have sufficient CENVAT credit during the relevant period, they could not use it for duty payment retrospectively.

Upon considering the arguments, the Tribunal examined Rule 173G, which mandates duty discharge by the 20th day of the month for the first fortnight and by the 5th of the following month for the second fortnight. The Tribunal noted that CENVAT credit utilization was subject to restrictions outlined in Rule 57AB, specifically limiting the credit usage to the amounts available on the 15th and last day of the month. Consequently, the manufacturer could not utilize credit earned after the default period for duty payment. As a result, the appeal was dismissed, upholding the restriction on utilizing CENVAT credit beyond the specified dates for duty payment, as per the legal provisions.

This judgment clarifies the interplay between Rule 173G and Rule 57AB of the Central Excise Rules concerning the availability and utilization of CENVAT credit for excise duty payment. It underscores the importance of adhering to the specific timelines and credit availability dates for discharging duty liabilities, preventing retrospective use of credit for defaulted payments. The decision reaffirms the legal framework governing duty payment mechanisms and upholds the restrictions on CENVAT credit utilization as prescribed by the rules.