Cenvat credit payment of duty remained valid before Rule 8(3A), despite withdrawal of fortnightly payment .

For the period before Rule 8(3A) of the Central Excise Rules, 2002 came into force, withdrawal of the fortnightly duty payment facility did not prohibit discharge of central excise duty through Cenvat credit instead of PLA. The Tribunal applied the Larger Bench view and held that the later restriction could not be used to govern the earlier period in dispute. The appellate order was therefore unsustainable, and the assessee was entitled to the benefit of payment through Cenvat account for the relevant period.

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Issues: Whether, during the period when the facility of fortnightly payment of duty stood withdrawn for default, the assessee could discharge duty liability by debiting the Cenvat account instead of paying through PLA, and whether the appellate order dismissing the appeal was sustainable.

Analysis: The appeal turned on the effect of forfeiture of the fortnightly payment facility and the legal position prevailing before insertion of Rule 8(3A) of the Central Excise Rules, 2002. The appellate authority had dismissed the appeal for non-compliance of the pre-deposit order and also recorded a rejection on merits. The Tribunal followed the Larger Bench view that, for the relevant period, Rule 173G(1) and the corresponding payment provisions did not prohibit discharge of duty liability through Cenvat credit, and that the later restriction introduced by Rule 8(3A) could not govern the earlier period in dispute.

Conclusion: The assessee was entitled to discharge duty liability through Cenvat credit for the relevant period, and the order-in-appeal was unsustainable.

Final Conclusion: The appeal succeeded and the impugned order was set aside with consequential relief to the assessee.

Ratio Decidendi: For the period prior to the introduction of Rule 8(3A) of the Central Excise Rules, 2002, withdrawal of the fortnightly payment facility did not bar discharge of duty liability through Cenvat credit, and such payment could not be denied on that ground.

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