Payment from Modvat credit is as good as tax paid:
The mode of payment of duty through Cenvat Credit is as good as making payment through account current. In Commissioner of Central Excise, Pune v. Dai IchiKarkaria Limited - , the Court described credit under the Modvat scheme to be "as good as tax paid".
The Supreme Court referred to the amendment to the Central Excise Rules in 2005 when the Rule 8(3A) was introduced, which provided for, "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 in the event of any failure, it shall be deemed that such goods have been cleared without payment of duty and the consequences and penalties as provided in these rules shall follow."
In any case, this Rule 8(3A) does not exist in that form now and the erstwhile rule had been struck down by the Gujarat High Court in the Indsur case - 2014-TIOL-2115-HC-AHM-CX.
We bring you this case also today.