The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that cenvat credit can be utilised for payment of duty in case of delayed excise duty and directed the excise department to refund the interest.
M/s Aman Pipes (P) Ltd, the appellant/assessee is engaged in the manufacture of ERW Steel Tubes falling under Chapter Heading 7306 9011. It was observed that they had defaulted in payment of Central Excise duty for the month from May 2012 to February 2013 and as a result, duty was payable for the default period and out of total amount of Rs. 1,08,70,234/- the appellant paid Rs. 20,60,000/- in cash and Rs. 88,10,234/- from Cenvat Credit account.
The department objected in terms of the provisions of Rule 8(3A) as utilisation of credit was not permissible for delayed payment of duty and therefore the said clearances were considered as made without payment of appropriate duty. The appellant thereafter paid the entire duty in cash along with interest amounting to Rs.37,47,573/- for the delay under the provisions of Rule 8(3A) of the Rules.
The appellant filed a refund claim of interest amounting to Rs. 37,47,577/- on 30.11.2015, under Section 11B of the Central Excise Act, 19444, on the ground that interest was not required to be paid by them as utilisation of credit was proper at the relevant time, and there was no delay in payment warranting any interest liability. Both the adjudicating authority and the appellate authority rejected the refund claim on the ground that the decision of the Gujarat High Court has been challenged by the Revenue and the Supreme Court has stayed the operation of the said judgement pending consideration.
The appellant contended that the order dated 29.07.2024 passed by the Supreme Court whereby the Revenue had withdrawn the appeal on account of low monetary effects. Therefore, the findings arrived at by the High Court of Gujarat have attained finality.
The bench of Binu Tamta (Judicial Member) has observed that Cenvat Credit cannot be utilised for payment of duty in case of delayed duty was pending before the Supreme Court. Now that the Revenue has withdrawn the appeal itself, the judgement of the High Court of Gujarat, declaring the provisions of Rule 8(3A) as ultra virus governs the present case.
The tribunal determined that the appellant’s use of the Cenvat credit was appropriate, and as a result, no interest was due on the sum paid. Therefore, from the date of the Supreme Court’s final order to the date of payment, the appellant is entitled to a refund of the amount they paid in interest on the duty that was delayed, with a rate of 12% annually.
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