Court Allows Appellant's Claim: NCCD Payment from Cenvat Credit Account Permissible

The court ruled in favor of the appellant, finding that the payment of National Calamity Contingent Duty (NCCD) from the Cenvat Credit account of Basic Excise Duty was permissible under Rule 3(6)(b) of the Cenvat Credit Rules, 2002. It was determined that the duty was paid on time, albeit from a different account, and the subsequent payment from the Personal Ledger Account (PLA) was considered a correction rather than a delay. Therefore, the imposition of interest and penalty was deemed unjustified, and the appellant's appeal was allowed.

---

---

Issues involved: Interpretation of Rule 3(6)(b) of Cenvat Credit Rules, 2002 regarding payment of National Calamity Contingent Duty (NCCD) from Cenvat Credit account of Basic Excise Duty, imposition of interest and penalty for alleged delay in payment.

Summary:

Interpretation of Rule 3(6)(b) of Cenvat Credit Rules, 2002:
The appellants were directed to pay NCCD from PLA due to the revenue's view that credit of Basic Excise Duty is not available for NCCD payment u/s Rule 3(6)(b) of Cenvat Credit Rules, 2002. Appellants debited the amount from PLA and informed the revenue accordingly.

Imposition of Interest and Penalty:
Proceedings were initiated against the appellants for alleged delay in payment of NCCD, resulting in a Show Cause Notice dated 10-2-2004. The Assistant Commissioner confirmed interest and imposed a penalty, which was upheld by the Commissioner (Appeals).

Judgment:
After hearing both sides, it was found that interest was confirmed against the appellant u/s Rule 8(3) of Central Excise Rules, 2002. However, it was clarified that the duty was paid by the due date, albeit from the Cenvat Credit account. The appellant's contention that NCCD is a duty of excise was supported by a Board Circular. The subsequent payment from PLA was considered corrective and not a delayed payment. Therefore, no interest or penalty was justified.

Conclusion:
The impugned order confirming interest and imposing penalty was set aside. As the appellant had already debited the duty from PLA and made corrective entries, no further order was passed. The appeal was allowed in favor of the appellant.

---