Cenvat payment during forfeiture period and PLA use conflict led to reference for Larger Bench consideration.

During the forfeiture period of the facility for fortnightly duty payment, the Tribunal considered whether duty could be paid from the Cenvat account instead of the PLA and whether such payment would attract interest and penalty. It noted conflicting prior views: one line held that payment had to be made through the PLA during forfeiture, with Cenvat payment inviting interest and penalty, while another view relied on the Bombay High Court decision in Lloyds Steel Industries Ltd. The Tribunal observed that the earlier cases turned on the deeming fiction in Rule 8 and the provisions governing payment from the account current during forfeiture. The issue was referred to the President for constitution of a Larger Bench.

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Issues: Whether, during the period of forfeiture of the facility for payment of duty on fortnightly basis, duty could be paid from the Cenvat account instead of the PLA and whether such payment attracted interest and penalty.

Analysis: The Tribunal noted conflicting views in its earlier decisions, some holding that duty had to be paid through the PLA during the forfeiture period and that payment from the Cenvat account would attract interest and penalty. It also noticed a contrary view based on the Bombay High Court decision in Lloyds Steel Industries Ltd., while observing that the earlier Tribunal line of cases had proceeded on the deeming fiction in Rule 8 and the related provisions governing payment from the account current during forfeiture.

Outcome: The question was referred to the President for constitution of a Larger Bench.

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