Cenvat credit duty timing: monthly payment under Rule 8 was accepted, and interest was not leviable.

Duty on inputs cleared as such under Rule 3(4) of the Cenvat Credit Rules, 2002 was not required to be paid on the date of removal after the 01-03-2003 amendment deleting that timing requirement. Payment made in accordance with the monthly cycle under Rule 8 of the Central Excise Rules, 2002 was accepted, and no basis remained to treat the assessee as in default. As the duty was not legally payable immediately on clearance, interest under Section 11AB of the Central Excise Act, 1944 was also not leviable for alleged delay. The challenge to the rejection of duty and interest demands therefore failed.

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Issues: (i) Whether duty on inputs cleared as such under Rule 3(4) of the Cenvat Credit Rules, 2002 was payable at the time of clearance or could be paid along with the monthly duty payment under Rule 8 of the Central Excise Rules, 2002. (ii) Whether interest under Section 11AB of the Central Excise Act, 1944 was leviable for the alleged delay in payment.

Issue (i): Whether duty on inputs cleared as such under Rule 3(4) of the Cenvat Credit Rules, 2002 was payable at the time of clearance or could be paid along with the monthly duty payment under Rule 8 of the Central Excise Rules, 2002.

Analysis: The dispute turned on the effect of the amendment brought by Notification No. 13/2003-C.E. (N.T.) dated 01-03-2003, which deleted the words indicating payment on the date of removal from Rule 3(4). In the period in question, the assessee paid duty in accordance with the prescribed monthly cycle under Rule 8, and the appellate authority found no basis to insist on immediate payment at the time of clearance of the inputs.

Conclusion: Duty on such clearances was not required to be paid at the time of removal and the assessee's monthly payment was accepted.

Issue (ii): Whether interest under Section 11AB of the Central Excise Act, 1944 was leviable for the alleged delay in payment.

Analysis: Since the duty liability was not held to be payable instantly on clearance of the inputs and the relevant period post-dated the amendment, the demand for interest could not survive. The appellate authority therefore found no infirmity in rejecting the interest demand.

Conclusion: Interest under Section 11AB was not leviable.

Final Conclusion: The Revenue's challenge failed, and the order of the Commissioner (Appeals) rejecting the demand was upheld.

Ratio Decidendi: Where Rule 3(4) no longer requires duty on inputs cleared as such to be paid on the date of removal, payment made in accordance with Rule 8 does not attract interest under Section 11AB absent any legally enforceable delay.

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