Central excise duty payment during forfeited instalment period could be made from Cenvat credit under the then-applicable rule

Forfeiture of the instalment facility under Rule 8 of the Central Excise Rules required duty payment by debit from the account current under the pre-1-4-2005 version of Rule 8(4). The later insertion excluding the operation of Rule 3(4) of the Cenvat Credit Rules, 2004 was treated as a prospective amendment, not applicable to the relevant period. Accordingly, payment of central excise duty from the Cenvat credit account during that period was not treated as unlawful, and no further duty liability was payable on that ground.

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Issues: Whether, upon forfeiture of the facility to pay central excise duty in instalments under Rule 8 of the Central Excise Rules, the assessee was required to pay duty only by debit from the account current or could also discharge the duty from the Cenvat credit account for the relevant period.

Analysis: Rule 8(4), as it stood prior to amendment with effect from 1-4-2005, required payment by debit from the account current during the period of forfeiture of the instalment facility. The subsequent insertion of the words excluding the operation of Rule 3(4) of the Cenvat Credit Rules, 2004 was treated as a prospective change. For the period in question, the earlier provision governed the assessee, and payment of duty from the Cenvat credit account was not illegal.

Conclusion: The assessee was not liable to be fastened with further duty liability for having paid duty from the Cenvat credit account during the relevant period.

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