Central Excise - Default in fortnightly payment of duty - debit from Modvat Account is permissible - SC

By Vijay Kumar

THIS case pertains to non-payment of excise duty on time for two months in the year 2000. The Commissioner withdrew the facility of fortnightly payment (as it existed then) and directed payment of duty on consignment basis for a period of two months, i.e., from 19.12.2000 to 18.02.2001, with the requirement that the duty shall be paid only from PLA and not from Modvat account. The assessee paid about 7 crores from PLA and about 31 lakhs from Modvat account. The Commissioner was not amused; he made them pay this amount also from PLA and demanded interest at the rate of 24%. This is the issue before the Supreme Court.

The moot question is as to whether it was not permissible for the appellant to utilize the Cenvat Credit during the aforesaid period of two months when facility for payment of duty fortnightly under Rule 173G was suspended.

While allowing the appeal of the assessee yesterday, the Supreme Court made some important observations: